WisdomTree ETF Travels To The Middle East

July 17th at 3:00pm by Tom Lydon

WisdomTree has edged their way into the Middle East exchange traded fund (ETF) lineup with the launch of a new fund.

The WisdomTree Middle East Dividend Fund (GULF) covers the same region as S&P’s GCC40 Index, which has no ETF yet associated with it, reports ETF Guide.

The underlying index is the WisdomTree Middle East Dividend Index, which is fundamentally weighted, and measures the companies domiciled in the region that pay regular cash dividends on shares of common stock.

One hundred companies are included, based upon market capitalization and no country represents more than 33%. At re-balancing, companies must have paid out $5 million in cash dividends for the cycle prior to the next one.

The Middle East has become one of the most attractive areas in the world for investors to access, as emerging markets become more correlated with developed ones. The Middle East, in particular, is drawing interest because of its potential for growth, as well as the fact that it has largely sat out the troubles that rising energy prices have caused around the rest of the world.

WisdomTree’s Director of Research Luciano Siracusano says that it’s the only real region where stocks have gone up uniformly in recent years.

The economies there are more than just oil, too. There’s increasing diversification in the economy, an improving legal framework, an effort made to diversify the economy and a younger urban population. The economies have also started to become integrated into global banking within the last three to five years.

Companies eligible for index inclusion must be incorporated in and have their shares listed on a major stock exchange in Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar or the United Arab Emirates (including Abu Dhabi and Dubai). The fund comes with an expense ratio of 0.88% and is 36% weighted in banking, followed by telecommunications (25%).

This fund is just the latest in a series to launch that offer access to the Middle East, including:

  • PowerShares Frontier Portfolio (PMNA)
  • Market Vectors Africa Index (AFK)
  • Claymore/BNY Mellon Frontier Markets (FRN)
  • iShares MSCI Israel Cap Investable Market (EIS)
  • NETS TA-25 Index Fund (TAV)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.