UAE firm plans ETF to invest in Saudi equities

ADS Investment Solutions, a subsidiary of UAE-based ADS Securities, is planning to create an exchange-traded fund (ETF) focused on Saudi Arabian equities and list it on the Abu Dhabi Securities Exchange, Reuters reported, citing company's chief executive officer.

The company aims to list the ETF as soon as in the next few weeks, depending on regulatory approvals.

“We see value in investing in Saudi with a passively managed, systematic strategy, with minimal fees and minimizing costs. An ETF is the best instrument for this,” Lemand said.

Foreign investors purchased a net $2.7 billion of Saudi stocks so far this year, making Riyadh one of the "hottest" markets outside the developed world.

In March, FTSE Russell decided to add Saudi Stock Market (Tadawul) to its emerging market index starting in March 2019, while MSCI will decide whether to take the same action in June.

ADS Investment’s ETF will track a new Saudi equities index developed with FTSE Russell. The index has been designed to minimize volatility and prevent excessive exposure to any particular stock or sector, FTSE Russell said in a statement.

The ETF will buy Saudi stocks through a qualified foreign institution licensed to invest directly in the Riyadh bourse.

"The initial capital for the fund had been allocated and it would start a marketing campaign in coming weeks," Lemand added.