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.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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