Wal-Mart (NYSE: WMT) has apologized to a Muslim woman who complained that a cashier in Utah mocker her veil, saying to her, "Please don't stick me up." The Council on American-Islamic Relations said the incident occurred on February 2.

According to the Associated Press, Rolando Rodriquez, a vice president and regional general manager for the company, sent the woman a letter saying that "I can assure you that the associate in question was disciplined in accordance with our employment policies as a result of the situation."

In addition, the store involved will hold sensitivity training sessions for its employees, with an emphasis on Islam-related issues.

It looks like Wal-Mart is handling this well, but I hope that the "discipline in accordance with employment policies" involved the immediate firing of the worker. If you need sensitivity training to know not to say stuff like that, you're probably too messed up to be working in retail.

Ryada Capital Investment Company, based in Kuwait, said this weekend that it is designing a hedge fund that will comply with Islamic law. The fund will carry an initial value of $100 million and will target low-risk investments. Fund managers hope to increase the size of the fund to $300 million within the next three years.

The fund will scarcely employ short selling or other speculative strategies. The law of Islam forbids both gambling and lending on interest, and the jury remains out on whether short-selling counts as either, so the practice will be "limited." Ryada Chief Executive Jamal Al-Saeed told Reuters that short selling will only be used "in case we need it," adding "speculation happens, it's human nature. But it's not the essence of the fund."

With the introduction of this fund, Ryada hopes to benefit from building demand for Islam-friendly investment vehicles, as Muslims seek to park their funds in investments that correspond to their beliefs. Barclays Capital is also reportedly at work on hedge funds that respect Islamic laws.

HSBC will hold all of the fund's assets ... the minimum subscription currently stands at $1 million.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Investing based on the principles of Islam has gained a fair amount of notoriety of late. According to Amana Funds, the most prominent Islam-based mutual fund, Muslim investing consists of avoiding interest and investments in businesses such as liquor, pornography, gambling, and banks. Bonds and other fixed-income instruments are also off-limits.

In some cases, these policies can lead to superior performance. For instance, Amana Funds missed all of the turmoil that has taken place in the subprime lenders of late, and the fund has an extremely strong long-term track record. The Wall Street Journal reported today that Shariah Capital and Barclays have developed a trading platform to accommodate hedge fund operations based on the principles of Islam. Under Muslim law, it is not possible to short stocks because you can't sell what you don't own.

This marks the continuation of strong growth in Islam-based investing. Investors looking for an easy way to avoid exposure to the banking industry may do well to look at some of these funds.

The Wall Street Journal recently featured a piece titled Financial Sector Is a Precarious State of Affairs. According to article: "If defaults by subprime borrowers begin to affect other parts of the economy noticeably, analysts say, financial stocks will suffer the brunt of it, bringing the market lower."

While some may see opportunity amid concerns about financials, particularly subprime lenders, others will want to steer clear of that sector. One interesting way to do that is with the Amana mutual funds, a group that invests based on the principles of Islam. One of the core tenets: not buying financial stocks, because lending money with interest (or borrowing) goes against Muslim law. The funds have an impressive track record to boot, and both the Amana Growth Fund and the Amana Income Fund are currently rated 5-stars by Morningstar.

So even if you're not Muslim, the Amana funds may be worth looking into as a way to avoid financial stocks. Log on to AmanaFunds.com to learn more.