Smart beta strategies (SBs) are quite popular in passive investing due to their ability to outperform conventional market capitalization-weighted (MCW) portfolios. This paper investigates the impact of SBs in the case of constrained portfolios such as Shariah-compliant equity portfolios (SCEPs)...

Shariah law prohibits investments in equities of companies for which interest income is a considerable source of revenue. In practice this is often enforced by prohibiting investments in firms for which the reported interest-based revenues exceed a predetermined percentage of the firm's total...

The choice of weighting method in constructing equity portfolio affects not only the financial performance, but also its Shariah-compliance. We show how the implicit bets in market capitalization weights, fundamental value weights, equal weights and low risk weights can affect the individual's...

The concept of interest free financing was practiced by Arabs prior to the advent of Islam, and was later adopted by Muslims as an acceptable form of trade financing. While the system had been used on a small scale for centuries, its commercial application began in 1970. Many countries in the...

Traditionally, passive portfolios are structured using an easy to implement market capitalization method albeit highly skewed towards large cap stocks. The introduction of smart beta strategies has allowed passive investors to structure equity portfolios using alternative strategies such as...