The first U.S. exchange-traded fund to follow an investing style tied to Islamic beliefs launched on Wednesday, joining a handful of others targeting a similar religious theme around the world.

The Javelin Dow Jones Islamic Market International Index Fund (NYSE: JVS) tracks an index of 100 companies outside the U.S. Some 23 companies representing 18 different currencies are included in the portfolio.

The ETF expects to wind up charging an annual expense ratio of 0.60%. It will avoid investing in companies involved in alcohol, gaming, weapons production, pork products and certain types of entertainment such as casinos, gambling and pornography.

Since Shariah law refrains from borrowing or lending at interest, financial stocks are significantly reduced in the portfolio, according to Javelin Investment Management.

The ETF's largest sector is oil and gas. Next in line are: basic materials, health care, tech and telecom. Just prior to launch, the fund's biggest country allocation was to the U.K. (21.04%), followed by Canada (10.71%), Japan (9.83%) and France (9.82%).

"With over seven million Muslims in the United States, we were surprised to discover that the investment needs of this vital population were not being met," said Brint Frith, Javelin's president and founder, in a statement.

Religious-based portfolios have been the most popular area of mutual funds taking a so-called "socially responsible" investing approach to markets. Earlier this year, FaithShares Advisors filed to launch five SRI portfolios.

SRIs Put New Spin On ETFs

Besides the new Javelin entries, those would represent a new twist in ETFs as SRI investing comes to the ETF marketplace. (See related story here.)

Javelin submitted its requests to the Securities and Exchange Commission last year to offer the first series of ETFs focused on Islamic beliefs. Today's release is expected to be the start of a new fund family marketed as JETS—Javelin Exchange Traded Shares.

What the JETS Dow Jones Islamic Market International Index Fund has going for it is not just the first-mover advantage with an Islamic ETF, but the overall size of the Islamic investment market. Various industry estimates put the size of Islamic investment at $700 billion currently, and project that the market is on its way to $1 trillion by 2010. It should be noted though that these estimates include a wide definition of "investment," which goes well beyond mutual funds.

Failaka, the Chicago and Dubai-based Islamic fund consultant, estimated late last year when Javelin filed for the new ETF that there were around 425 Islamic-themed mutual funds and fundlike products worldwide, with approximately $18 billion in assets.

There are a handful of open-end mutual funds in the U.S. investing based on Shariah principles. One manager of these funds, Saturna Capital, has stood out. At the end of last year, it had more than $1 billion in assets under management.

Worldwide, Barclays Global Investors runs a trio of ETFs following Islamic indexes as part of its London-based iShares European family. BNP Paribas has an ETF based on the Dow Jones Islamic Titans Index, while Daiwa Securities launched an ETF based on a FTSE Shariah index focused on Japan.

Javelin Investment Management has been formed by two former officials of Philadelphia Brokerage, a boutique investment bank and brokerage house.

The original registration statement can be found here.