Abu Dhabi asset manager unveils Sharia-compliant ETF

The ETF will have two different asset classes in Dubai and Abu Dhabi

Exchanges across the region are stepping up efforts to diversify their product offerings to bring more foreign direct investment and boost trading activity. Satish Kumar / The National 

Chimera Capital, an Abu Dhabi asset management company and subsidiary of Chimera Investments, launched an exchange traded fund that will be available to investors through the UAE’s two main stock exchanges.

The Chimera S&P UAE Sharia ETF will have two different share classes that will track a Sharia-compliant index compiled from stocks listed in Abu Dhabi and Dubai.

Class-A shares will be listed on the Abu Dhabi Securities Exchange and gains will be ploughed back into the fund. Class-B shares will be listed on the Dubai Financial Market, with dividends distributed to investors.

Exchanges across the region are stepping up efforts to diversify their product offerings to bring more foreign direct investment and boost trading activity.

Last week, ADX chief executive Khaleefa Al Mansouri told The National that there would be an ETF listing on the exchange in August.

“The ETF will open up a new wholesale investment opportunity to a unique investor profile,” a Chimera Capital representative said.

“The Chimera S&P UAE Sharia ETF allows investors to capitalise on the prospects of the UAE’s economy while staying true to the principles of Sharia, and with the added flexibility of choosing between regular portfolio returns or maximising future investment returns, thanks to the ETF’s dual-share class option.”

ETFs are bought and sold much in the same way as shares but operate as index-tracking funds, passively following indexes such as the S&P 500 or FTSE 100 and a vast range of smaller exchanges and commodities such as gold, silver, copper, sugar, coffee and oil.

They often have zero upfront fees and annual charges are as low as 0.07 per cent a year.

Both classes of the Chimera S&P UAE Sharia ETF will replicate the S&P UAE Domestic Sharia Liquid 35/20 Capped Index.

The index is provided by S&P Dow Jones and tracks the performance of UAE Sharia-compliant liquid equities.

“With a primary listing on ADX, it is a new opportunity for them to add variety to their portfolios and manage risk more effectively,” Mr Al Mansouri said.

Hassan Al Serkal, chief operating officer and head of the DFM’s operations division, said the listing would provide DFM’s investors with “a new product to invest in companies represented in the S&P UAE Domestic Sharia Liquid 35/20 Capped Index”.