Abu Dhabi-based asset manager Afkar Capital has launched the first UCITS-compliant exchange-traded fund to list in the Middle East. The Afkar S&P UAE UCITS ETF (UAETF) will list on local stock exchange Dubai Financial Market on Wednesday.
His Excellency Essa Kazim, Chairman of Dubai Financial Market.
The fund tracks the S&P UAE BMI Liquid 20/35 Capped Index, a reference for the largest stocks by market capitalization in the UAE. The parent index is the S&P United Arab Emirates BMI. After performing an initial liquidity screen, the remaining constituents are weighted by modified float-adjusted market capitalization. If the largest stock’s weight exceeds 35%, it is capped at 33%. If the weight of any other stock is greater than 20%, it is capped at 19%. The index is rebalanced quarterly in March, June, September, and December.
His Excellency Essa Kazim, Chairman of Dubai Financial Market, said in a statement: “Dubai Financial Market is delighted to welcome this significant step from Afkar Capital, in line with our strategy to provide investors with innovative and diversified investment products. We have extensively collaborated with various market participants in general and the three leading institutions, namely Afkar Capital, BNY Mellon and S&P Dow Jones in particular to create a favourable regulatory framework for the listing and trading of ETFs based on best practices…. We are pleased with Afkar Capital’s decision to list the first foreign ETF on Dubai Financial Market, which further strengthens the market’s leading position as the most favoured listing venue for companies in the UAE and beyond.”
Seif Fikry, Afkar Capital Chief Executive Officer and Founding Partner, added: “UAETF provides investors access to one of the most well-known indices tracking the Abu Dhabi Exchange (ADX), the Dubai Financial Market and Nasdaq Dubai. It provides investors with balanced exposure to the second-largest market in the Middle East and North Africa (MENA) in terms of both capitalisation and liquidity.”
Charbel S. Azzi, Head of Middle East, Africa & CIS of S&P Dow Jones Indices, said: “S&P Dow Jones Indices is pleased to be the index provider for this groundbreaking ETF launched by Afkar Capital. UAE is one of the most dynamic economies in the Middle East and we are proud to play a part in supporting its development and broadening investor choice here with our world-class expertise in index design and governance.”
As of 27 June 2016 the index has significant exposure to the financials (62.3%), telecommunication services (20.8%) and industrials (12.0%) sectors.
BNY Mellon was appointed fund administrator, Irish trustee, transfer agent and global custodian for the fund.
“BNY Mellon has a long history supporting the unique servicing needs of ETFs,” said Tarek Sherlala, BNY Mellon’s Head of Asset Servicing for the Middle East and Africa. “Our advanced technology and highly regarded services are supporting Afkar’s launch of this exciting initiative.”
The ETF will have a total expense ratio of 1.00%.