In India, Dow Jones Meets Dharma

A new set of indices measuring such characteristics as good governance and eco-friendliness is winning favor with investors and gurus alike

by Nandini Lakshman

The recently installed bronze bull in its present position outside the Mumbai Stock Exchange, Jan. 31, 2008. Retail investors and brokers are asking that it be repostioned based on superstition and astrological beliefs. PAL PILLAI/AFP/Getty Images

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Maharishi Mahesh Yogi, the Indian sage who taught transcendental meditation to the Beatles, died in the Netherlands on Feb. 5. Back in India, a new generation of gurus is promoting the latest thing to hit the Indian stock market: values investing. Not to be confused with Warren Buffett-style value investing, values-based investing draws on the principles of Indian religions such as Hinduism, Jainism, Sikhism, and Buddhism. Last month Dow Jones (DJ) launched the faith-based Dow Jones Dharma indices, which measure the performance of 254 companies that have characteristics like good governance and environmental friendliness in common.

Letters are pouring in to support the new group of five indices. They are not your typical congratulatory notes, but blessings and endorsements from assorted Indian spiritual leaders and scholars. "May the maximum number of investors utilize it, and thus globally advance core Hindu values," writes Shastri Narayanswarupdas, a religious leader from Ahmedabad in western India. Writes another: "Trust is the breath of business, ethics its limbs, to uplift the spirit its goal."

Praise like that "lends credibility to the index," boasts Nitesh Gor, chief executive officer of Dharma Investments, a faith-based investment boutique from Boulder, Colo., that dreamed up this scheme. Apart from the Dow Jones Dharma Global Index, there are four country-specific Dow Jones Dharma indices, for India, the U.S., Britain, and Japan.

Invest According to Religious Beliefs

Here's how the indices work. Even though there are four country-specific indices, Sumeet Nihalani, senior director for Asia Pacific sales at Dow Jones Indexes, says that the appetite for dharma or faith-based investing is "global and from people of different faiths and nationalities." So asset managers can create global or country-specific products using these indices, enabling Hindus, Buddhists, Jains, and Sikhs to invest in stocks that are in sync with their religious beliefs.

The dharma-compliant stocks, according to Gor, are those that adhere to the precepts relevant to good conduct. They include opposition to animal slaughter, support of the environment, and adherence to good corporate governance. Assorted temples, scholars, and academicians support the idea. Among them are the Jagannath temple, a leading temple in the eastern state of Orissa; Pejawar Math Swami, a spiritual Hindu leader; and Kabil Singh, head of the department of philosophy and religion at Thammasat University in Bangkok.

There's no shortage of companies that adhere to these Dharma principals. Already, in India, Dow Jones has compiled a list of 254 companies that are dharma-compliant. The full list is not yet available, but a few names provided by Dow Jones include HDFC Bank, ICICI Bank, leading engineering and construction company Larsen & Toubro, India's largest telecom player Bharti Airtel, and IT biggie Infosys (INFY). Dow Jones' Nihalani reveals that these companies passed the screen for "financial compliance, industry sector, business activity, and corporate and social responsibility."