Tenets for the times

Investments that adhere to Islamic law have at least one advantage at the moment: They restrict the use of leverage, according to a report from State Street Corp.

“The tenets of Islamic finance — lower leverage, transparency and no speculation — make it an attractive investment option in any market environment, especially today’s,” Rod Ringrow, senior vice president of State Street’s unit in Doha, Qatar, said in a statement.

The Islamic finance industry has grown by nearly 20% a year since 2003, according to Boston-based State Street. The industry has more than $600 billion in assets under management.

Although there isn’t a huge variety of Islamic investment products, some newly created investment vehicles are attracting interest, and there is a growing demand in the United States and globally, according to State Street.

Some of the products include money market, equity, real estate, private-equity and infrastructure funds, according to the report.

The investments must comply with the principles of Shariah, the moral and legal code that governs Islam.

Islamic financial institutions can’t charge interest on deposits and they can’t use hedging or derivative instruments. Islamic mutual funds can’t invest in banks or other firms that earn money by charging interest and they must screen out so-called sin stocks.

Many Islamic mutual funds have fared better than their more conventional counterparts, the report noted.

But the funds aren’t completely immune to the economic downturn.

“These funds traditionally have high exposure to real estate and are vulnerable to declining house prices,” Mr. Ringrow wrote.