Investors looking for a more diversified approach can evaluate the WisdomTree Middle East Dividend Fund (NasdaqGM: GULF), which allocates 32% of its weight to Qatar and features a 60.1% weight to the financial services sector.
Qatar National Bank is GULF’s second-largest holding at a weight of 7% and the other aforementioned banks combine for about 5.5% of GULF’s weight. Exposure to Qatar National Bank is significant because S&P notes the bank has the “strongest efficiency ratio among the banks we rate in the GCC.”
GULF is fortified by a 6.23% distribution yield and another important trait. The transition of Qatar and UAE to the MSCI Emerging Markets Index will not impact GULF, which allocates a combined 59.4% of its weight to those nations, because the ETF is benchmarked to the WisdomTree Middle East Dividend Index (WTEMME). [Get Together With GULF]
S&P rates the capital and earnings positions of the aforementioned Qatari banks as strong with average/adequate funding and liquidity positions. Only UAE banks have better net interest margins (NIM) than Qatar-based banks, but Qatari banks’ NIM is vulnerable to upward revisions in monetary policy (Translation: Rate hikes) in Qatar, which could be triggered by the Federal Reserve raising rates next year, according to S&P.
WisdomTree Middle East Dividend Fund Top Holdings
Table Courtesy: WisdomTree
Tom Lydon’s clients own shares of EEM.