Saudi Arabia is ready for exchange traded funds (ETFs). The country’s stock market is one of the largest among the emerging-market countries with about $360 billion of market capitalization. However, it is often overshadowed by other emerging markets, such as Brazil, China and India. One reason the country tends to get overlooked is because it has many foreign ownership restrictions, according to Farhan Mahmood for The Middle East North Africa Financial Network (MENAFN). Much in the same way Americans love ETFs, Saudi Arabia would receive several similar benefits from having ETFs, including:

  • ETFs generally are more transparent than mutual funds, which typically appeals to investors. An underlying index for ETFs to track is available already: the Tadawul All-Share Index.
  • ETFs tend to have lower costs than mutual funds.
  • A Saudi ETF will allow retail investors to have access to the same product as institutional investors at the same cost.
  • ETFs have the potential to broaden the Saudi market’s investor base and raise additional capital.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.