236 AN INTRODUCTION TO ISLAMIC FINANCE
TABLE 11.3 Performance comparison of S&P Shari’ah 500 and S&P 500
Index Performance Quarter YTD 12M 3 Year 5 Year
S&P Shari’ah 500 − 7.23% − 7.23% −30.22% −7.31% −0.67%
S&P 500 −11.01% − 11.01% −38.09% −13.06% −4.76%
Standard Deviation 3 Year 5 Year
S&P Shari’ah 500 16.35% 13.92%
S&P 500 17.67% 14.69%
Sharpe Ratio 3 Year 5 Year
S&P Shari’ah 500 −0.17 − 0.06
S&P 500 −0.26 − 0.13
Source: S&P (2009)
TABLE 11.4 Ratio comparison of S&P Shari’ah 500 and S&P 500
S&P 500 Shari’ah S&P 500Market Cap (US$ million) 80,578.20 66,828.54
P/E 12.5 11.8
P/CF 7.9 6.2
P/Sales 1.4 0.8
P/BV 2.3 1.6
3 - year EPS Growth 17.1 12.9
3 - year Sales Growth 12.8 12.6
ROE 25.8 21
ROA 12.8 9.6
LTD/Capital 24.9 32.9
Operating Margin 21.2 18.6
Net Margin 13.6 11
Dividend Yield 2.54 3.42
Source: S&P (2009)
ratio of the S&P Shari’ah 500 index, which stands at 25 percent. Theoretically,
this ratio, which indicates leverage, should be as close to zero as possible but
Islamic indices relax the leverage requirement and select stocks of fi rms with
low ( 33 percent) leverage.