BNP Paribas Asset Management, DBS Bank issue first tech Islamic mutual fund in Indonesia

JAKARTA – Responding to a shift in investor demand, BNP Paribas Asset Management and DBS Indonesia have issued the first technology-themed Islamic mutual fund in Indonesia.

DBS Bank Indonesia will act as selling agent to distribute the BNP Paribas DJIM GT Titans 50S USD.

“The COVID-19 pandemic has accelerated the growth of the new economy and there is a shift in investor behavior triggered by it, which diverts investors’ attention from the traditional sectors, and encourages technology stocks to grow rapidly globally,” Priyo Santoso, President Director of PT BNP Paribas Asset Management told members of the media on Wednesday (September 22).

“Data from S & P Dow Jones Indices show strong annualized performance for the conventional technology index, the Dow Jones Global Technology Index, for instance, exceeding 28% for a period of five years per end of August 2021,” he said.

The new fund focuses on technology sectors that are considered the backbone of the new economy, including internet and social media, software, computer hardware, office equipment, semiconductors and communication equipment. These sectors are included in the coverage of the Dow Jones Islamic Market (DJIM) Global Technology Titans 50 index, which is the reference index for the BNP Paribas DJIM GT Titans 50S USD.

The fund aims to provide investors with an objective representation of fast-growing technology companies around the world, as well as diversification and transparency.

“The application of Shariah principles is an added value that helps in stock screening, thereby protecting investors from companies with excessively high debt levels that are often encountered in this sector,” said Priyo.

BNP Paribas DJIM GT Titans 50S USD aims to replicate the Dow Jones Islamic Market Global Technology Titan 50 Index issued by global index provider S&P Dow Jones Indices. The index contains 50 stocks of global technology-related companies, and is divided into two broad themes, Software and Computer Services and Hardware and Technology Equipment. Company screening is carried out by considering business activities and financial ratios, making this mutual fund investment Shariah-compliant. 

The Islamic mutual fund index’s sector-based screens automatically eliminates companies that are engaged directly in non-halal businesses or those that have 5% or more (accumulatively) of income derived from prohibited businesses such as alcohol, products containing pork, weapons, gambling, and adult entertainment.

The fund’s constituents are also subject to accounting-based Shariah screens that have a threshold of 33% for certain ratios.

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