Fund in Abu Dhabi tracking Saudi shares is a first for Gulf ETFs

The Gulf’s exchange-traded fund industry took another step forward this week with the launch of the first vehicle that invests in stocks from a neighbouring country.

Chimera Capital has listed the Chimera S&P KSA Shariah exchange-traded fund in Abu Dhabi. The product will allow traders in the UAE to track Saudi stocks via a local bourse – a first for the Gulf’s fledgling ETF market.

The fund tracks the S&P Saudi Arabia Shariah Liquid Top 30 35/20 Capped Index, which is up 44 per cent over the past year. The gauge tracks the top 30 largest and most liquid Shariah-compliant stocks listed in Saudi Arabia.

“The next obvious market was Saudi Arabia – it’s the biggest market in the region,” Sherif Salem, the firm’s chief investment officer of public markets said in an interview.

The fund’s asset under management rose to Dhs70m ($19m) by the end of the week, he said.

Gulf investors can choose between eight different equity-focused ETFs in the region, with three in Saudi Arabia, two in Qatar and three in the UAE. Exchanges in the UAE are stepping up efforts to diversify their product offerings and boost trading activity.