Assets of UAE's first ETF climb above Dh50m just six months after its listing

Chimera S&P UAE Shariah Exchange Traded Fund is managed by Abu Dhabi's Chimera Capital

ADX's current market capitalisation sits at Dh808bn, having increased by almost 40% in 2020. Reuters

Assets managed by the Chimera S&P UAE Shariah Exchange Traded Fund climbed to more than Dh50 million ($13.6m) just six months after the UAE’s first ETF started trading on the country’s two stock exchanges.

The ETF now ranks as the third-largest in the Middle East and North Africa region, Abu Dhabi-based asset management firm Chimera Capital said in a statement on Monday.

The net asset value of both share classes of the ETF increased by more than 19 per cent since listing, Chimera Capital, which manages the fund said.

“Strong performance and robust inflows have accelerated Chimera S&P UAE Shariah ETF’s rise, helping us to reach this significant milestone in such a short space of time,” Seif Fikry, chief executive of Chimera Capital, said.

“There is a growing appetite for diversified investments among GCC investors and we are enabling them to capitalise on the economic prospects of the UAE with this ETF.”

Chimera S&P UAE Shariah ETF – Share Class A and Class B started trading on the Abu Dhabi Securities Exchange and the Dubai Financial Market, respectively in August. It had AUMs of less than Dh2m when it began trading and a market capitalisation of Dh234bn. Its total market capitalisation has now climbed to Dh338.6bn, according to Chimera's website.

Both share classes are designed to replicate the S&P UAE Domestic Shariah Liquid 35/20 Capped Index, made up of some of the country's most prominent companies including telecoms operator Etisalat, Dubai Islamic Bank and developer Aldar Properties.

The Chimera S&P UAE Shariah ETF is structured and built by S&P and monitored by a Sharia board that reviews and re-balances the index on quarterly basis.

The ETF's Class-A shares, its primary listing in Abu Dhabi, reinvests income into the fund. The Class-B shares listed on Dubai bourse distributes dividends to investors.

"Our primary focus right now is to grow the existing product," Mr Fikry told The National on Monday.

"[In the future] we look forward to growing ETF ecosystem in the GCC, and we would like to be a part of creating an ETF hub in the Middle East, using Abu Dhabi as a springboard."

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 the FTSE 100 and a vast range of smaller exchanges and commodities such as gold, silver, copper, sugar, coffee and oil.

Compared to more than 6,970 ETFs globally, holding more than $7 trillion in assets from more than 400 providers, ETFs in the Middle East are currently only worth about $285m, according to Chimera Capital.

“While there are still a number of challenges to address in the Gulf’s ETF landscape … we are excited about the future of ETFs in the region,” Sherif Salem, chief investment officer of capital markets at Chimera Capital, said.

The company, a subsidiary of Chimera Investments, has doubled its staff in recent months and is planning to launch other products "across asset classes" to grow its asset management business, Mr Fikry said.

Bourses in the region are expanding their product offerings, encouraging asset managers to list ETFs and real estate investment trusts, or Reits, as part of efforts to attract more investments and boost trading activity. Net flows into GCC markets by foreign investors increased by $6.36bn last year, according to a report published last week by Oman's Ubhar Capital.

Al Mal Capital, an asset management subsidiary of Dubai Investments, last month raised Dh350m through the public float of its Reit, on the DFM.

Khaleefa Al Mansouri, the former chief executive of Abu Dhabi's exchange, told The National in July that several Reits were also considering listing on the ADX.