A little more than a month after the launch of the first exchange-traded fund (ETF) in the UAE, investors are showing little enthusiasm.
After peaking on April 15 when 150,000 shares traded, volumes have slipped for the OneShare Dow Jones UAE 25 ETF. There were 25,000 shares traded yesterday.
An ETF tracks a basket of stocks or commodities but trades like an individual share. In this case, the OneShare ETF includes the top 25 publicly traded companies in the region.
One of the main attractions of ETFs in the region, in theory, is that they allow institutional traders and high-net-worth individuals to take larger positions without being constrained by the limits set by bourses on the number of shares investors can buy in a single day.
But most bigger investors left regional markets after the Dubai World debt restructuring and are waiting until there is a complete resolution before diving back in.
An ETF can also allow smaller investors to gain exposure to a broader index without having to buy a variety of individual shares. But the overall economic uncertainty is also weighing on smaller investors.
It does not help that while the fees for buying an ETF share are lower than those paid on hedge funds or an actively managed mutual fund, they can be higher than buying individual shares.
Buying into an ETF through a brokerage house, an investor will still have to pay Dh75 or a fee of 27.5 basis points, whichever is greater, on top of the annual fee of 99 basis points for the ETF, according to Saad al Chalabi, the institutional trader at Al Ramz Securities.
Finally, the OneShare ETF may effectively track UAE markets but that does not yet necessarily equate to much diversification. More than half of the fund is weighted in financial and property stocks.
ETFs are popular investment tools worldwide and a long-overdue addition to regional bourses, but it is not hard to see why investors are staying away for the time being.
halsayegh@thenational.ae
THE SPECS
Engine: 3.6-litre V6
Transmission: eight-speed automatic
Power: 285bhp
Torque: 353Nm
Price: TBA
On sale: Q2, 2020
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The five pillars of Islam
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
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THE SCORES
Ireland 125 all out
(20 overs; Stirling 72, Mustafa 4-18)
UAE 125 for 5
(17 overs, Mustafa 39, D’Silva 29, Usman 29)
UAE won by five wickets
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
'The Woman in the House Across the Street from the Girl in the Window'
Director:Michael Lehmann
Stars:Kristen Bell
Rating: 1/5
Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
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