BlackRock’s (NYSE: BLK) iShares unit, the world’s largest issuer of exchange traded funds, today launched the the iShares MSCI Qatar Capped ETF (NasdaqGM: QAT) and the iShares MSCI UAE Capped ETF (NasdaqGM: UAE), the first single-country funds devoted to those fast-growing Middle East equity markets.
The launch of iShares MSCI Qatar Capped and the iShares MSCI UAE Capped ETF comes just days ahead of the scheduled promotion of those countries from frontier to emerging markets status. Qatar and UAE, both OPEC members, are the first Middle East countries to move from a frontier markets index to the MSCI Emerging Markets Index. The two countries currently combine for over 36% of the iShares MSCI Frontier 100 ETF’s (NYSEArca: FM) weight. [Departures Could Help Frontier ETF]
QAT holds 25 stocks and charges 0.61% per year. Financial services stocks account for 43% of the new ETF’s sector weight while telecom and industrial names combine for another 26.2%, according to iShares data.
UAE also holds 25 stocks with a 0.61% annual expense ratio. The first UAE-specific ETF allocates nearly 43% of its weight to the financial services sector with another 14.1% going to industrials.
The International Monetary Fund (IMF) has forecasted higher GDP growth for both countries than the broader developed markets. While currently both markets lean heavily toward financials, industrials and energy, further expansion is expected to help them diversify into other sectors such as transportation, real estate and construction, and hospitality, said iShares in a statement.
“The launches of the iShares MSCI Qatar Capped ETF and iShares MSCI UAE Capped ETF meet an immediate need of investors awaiting the countries’ upgrade to emerging markets. Pensions, foundations and endowments, who in particular have the most global-oriented portfolios, have reasonably sized allocation levels in broad emerging markets with over- and under-weights in single country emerging markets. By iShares launching the new funds now, investors are equipped to make adjustments to their emerging markets portfolios to strategically or tactically diversify their portfolios,” said iShares Global Markets and Investments head Patrick Dunne in the statement.
Stocks in listed in Qatar and UAE have been among the world’s best performers since the start of 2013. Over the past year, Dubai’s Financial General Market Index has more than doubled while the Abu Dhabi Securities Market General Index is higher by 55%. Qatar’s benchmark QE Index (DSM) is up 35% in the past year. [Investors Flocking to Qatar, UAE Stocks]
ETF Trends editorial team contributed to this post.
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