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iShares, the exchange-traded funds business of investment giant BlackRock, has launched two new ETFs providing exposure to Qatar and the United Arab Emirates (UAE).
Listed on Nasdaq, the iShares MSCI Qatar Capped ETF (QAT) and iShares MSCI UAE Capped ETF (UAE) are the first ETFs to provide single country exposure to two countries that MSCI will graduate from frontier markets to emerging markets status at the end of May.
The funds further expand iShares’ emerging markets offering which already includes more than 20 single country and regional ETFs, plus the iShares Frontier Markets ETF (FM) that offers 100% pure exposure to frontier markets countries.
Qatar and the UAE are the first Middle Eastern countries to be promoted to emerging markets status due to the development of their securities markets and past and future expected steady growth. The IMF has forecasted higher GDP growth for both countries than the broader developed markets. While currently both markets lean heavily toward financials, industrials and energy, further expansion is expected to help them diversify into other sectors such as transportation, real estate and construction, and hospitality.
Patrick Dunne, Head of iShares Global Markets and Investments at BlackRock, said: “The launches of the iShares MSCI Qatar Capped ETF and iShares MSCI UAE Capped ETF meet an immediate need of investors awaiting the countries’ upgrade to emerging markets. Pensions, foundations and endowments, who in particular have the most global-oriented portfolios, have reasonably sized allocation levels in broad emerging markets with over- and under-weights in single country emerging markets. By iShares launching the new funds now, investors are equipped to make adjustments to their emerging markets portfolios to strategically or tactically diversify their portfolios.”
The Qatar-linked fund tracks the MSCI All Qatar Capped Index. This index provides broad-based exposure to equity securities that are classified in Qatar according to the MSCI Global Investable Market Indices methodology, as well as securities of companies that are headquartered or listed in Qatar and have the majority of their operations based there. The underlying index may include large-, mid- or small capitalization companies and components primarily include financials, telecommunication services and industrials companies.
The UAE-linked fund tracks the MSCI All UAE Capped Index. This index provides broad-based exposure to equity securities that are classified in the UAE according to the MSCI Global Investable Market Indices methodology, as well as securities of companies that are headquartered or listed in the UAE and have the majority of their operations based there. The underlying index may include large-, mid- or small capitalization companies and components primarily include financials, industrials and healthcare companies.
Both MSCI indices are free float-adjusted market capitalization-weighted indexes with a capping methodology applied to issuer weights so that no single issuer of a component exceeds 25% of the index and all issuers with a weight above 5% do not, in the aggregate, exceed 50% of the index.
Baer Pettit, Managing Director and Global Head of the MSCI Index Business, said: “MSCI’s reclassification of these countries and inclusion into our flagship Emerging Market Index reflects the broader global opportunity set available to international institutional investors today.”
Both funds have net expense ratios of 0.61%.