By Eric Rosenbaum

Javelin Investment Management, a newly formed exchange-traded funds company, has filed with the Securities and Exchange Commission for the first U.S. ETF to be based on an Islamic index.

The JETS (Javelin Exchange Traded Shares) Dow Jones Islamic Market International Index Fund is the latest example of an ETF manager hoping to find success in the crowded ETF market with a first-of-its-kind portfolio.

Copycats are out, and niche strategies are in, as more managers enter the ETF space. Global X Funds has plans to launch a series of country ETFs that face no direct competition, while Northern Trust’s NETS ETF family has launched a series of funds this year targeting previously untouched asset classes by U.S. ETF sponsors.

It is a fine line, though, between steering clear of the asset classes dominated by the big ETF companies, and creating portfolios so niche in nature that asset growth is a long haul.

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.

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