Abu Dhabi's Chimera Capital launches two US Sharia-compliant ETFs

Chimera Capital, an Abu Dhabi asset management company and subsidiary of Chimera Investments, launched two new Sharia-compliant exchange-traded funds (ETFs).

The Chimera S&P US Sharia Value ETF and the Chimera S&P US Sharia Growth ETF are “physical, in-kind, liquid and fully fungible” funds, the company said.

They will be listed on Abu Dhabi Securities Exchange (ADX), the Arab world's second-largest stock market by market value.

ETFs are a basket of securities consisting of stocks, bonds, commodities or other financial assets that track global markets. They are popular with retail investors because of their low-cost fees and easy access to a range of diverse assets.

The latest funds adds to Chimera Capital’s portfolio of eight ETFs that have exceeded Dh420 million ($114.34) in assets under management within two years, Basar Shueb, chairman of Chimera Capital, said.

“The latest two launches now provide investors with direct access to the biggest and most active stock market in the world, underlining Chimera’s commitment to playing an active role in deepening and expanding the UAE’s capital markets landscape,” Mr Shueb said.

Bourses in the GCC region are accelerating efforts to diversify their product offerings to attract more foreign direct investment and boost trading activity.

Globally, massive inflows and stimulus-fuelled stock markets lifted the total invested in listed ETFs to $9.46 trillion, data provider ETFGI said in August last year. That is more than double the amount at the end of 2018 and more than triple the $3tn total hit in May 2015.

The Chimera S&P US Sharia Value ETF is the fourth Sharia-compliant sub-fund under the Securities and Commodities Authority-registered Chimera umbrella fund.

It will track the performance of the S&P high yield dividend aristocrats US Sharia top 30 35/20 capped index.

The index, which is provided by S&P Dow Jones Indices, is designed to measure the performance of 30 of the biggest and most liquid Sharia-compliant companies within the S&P composite 1500 that have consistently increased dividends every year for at least 20 years.

It includes blue chip stocks such as Johnson & Johnson, Procter & Gamble and Exxon Mobil. Any dividends collected by the fund will be distributed to investors, as available.

Meanwhile, the Chimera S&P US Sharia Growth ETF will track the performance of the S&P 500 US Sharia top 30 35/20 capped index. It will reinvest income back into the fund at no additional expenses to the unit holders.

“The listing of Chimera Capital’s sharia-compliant S&P US ETFs will provide investors on the ADX with new opportunities to diversify their holdings in an efficient and low-cost manner and has made our exchange home to the largest number of ETFs in the region,” said ADX managing director and chief executive Saeed Al Dhaheri.

“As part of our strategy to enhance market liquidity and attract more international investments, we will continue to encourage new listings and roll out products and services that meet the needs of market participants,” Mr Al Dhaheri said.

Both ETFs will be managed by Chimera Capital’s onshore company, Chimera Capital, which is licensed by the SCA.