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Russell launches Sharia indexes, partners Jadwa

* Jadwa Investment to use Sharia index for products

* Index follows increased appetite for Islamic products

LONDON, June 24 (Reuters) - U.S. fund manager Russell Investments [RML.UL] has launched its first range of Islamic compliant indexes with Saudi investment services group Jadwa, responding to growing demand in the Middle East.

The Russell-Jadwa Sharia index range includes a suite of 10 indexes involving companies all over the world which comply with Islamic finance requirements.

Islamic finance avoids interest, excessive leverage and regards sectors such as mainstream finance, alcohol and weapons production as forbidden. Mainstream financial companies are also excluded, a choice which has partially protected Islamic funds from the heavy market downturn.

A group of Islamic scholars screen the compliant companies in the indexes every quarter.

Jadwa Investments, which provides investment banking, fund management and corporate advisory, and Russell already co-operated in 2007 when they launched two Sharia compliant equity funds.

The Saudi-Arabian group will use the indexes launched on Tuesday for its products, said Chief Executive Ahmed Al-Khateeb at a news conference. The group has about $2 billion in assets under management.

Pascal Duval, the managing director of London-based partnerships at Russell said the indexes had attracted investors’ interest. He said “soft commitments” of around $1 billion had been given, but declined to give further details.

He also said the ethical principles of Islamic finance’s appealed beyond Muslim investors to include Western investors keen on socially responsible investments.

Islamic finance has grown significantly in the last five years, partly on the back of the oil price increase.

Earlier this year consulting firm Oliver Wyman estimated that by 2012 Islamic assets will reach $1.6 trillion.

For the Hedge Hub blog, visit: blogs.reuters.com/hedgehub/ For the Global Investing blog, visit: here Reporting by Cecilia Valente, Editing by Greg Mahlich

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