An ETF to Capture the Kuwait Equity Market | ETF Trends

BlackRock iShares’ recently launched Kuwait exchange traded fund can help investors take a targeted approach to an emerging Middle East economy.

The iShares MSCI Kuwait ETF (CBOE: KWT), which was launched on September 1, tries to reflect the performance of the MSCI All Kuwait Select Size Liquidity Capped Index. KWT comes with a 0.74% expense ratio.

KWT YTD Performance

The underlying MSCI All Kuwait Select Size Liquidity Capped Index is weighted by a modified free-float market capitalization and covers companies that are listed in Kuwait, headquartered there or have significant ties to the country, according to the fund prospectus.

The addition of the iShares MSCI Kuwait ETF to iShares’ ETF lineup helps round out the fund provider’s Middle East Gulf State country-specific ETF suite, which also includes ETFs that track Saudi Arabia, Qatar, and the United Arab Emirates. These are the only country-specific ETFs tracking these emerging markets.

KWT includes a hefty 66.8% tilt toward financial stocks, followed by 13.2% industrials, 6.2% real estate, 4.6% consumer discretionary, 4.3% communication services, 2.5% materials, 1.5% consumer staples, and 1.1% energy. The fund is also very top heavy with top holdings including National Bank of Kuwait 21.1%, Kuwait Finance House 20.3%, Human Soft 4.6%, Ahli United Bank 4.5% and The Public Warehousing 4.5%.

Kuwait’s market is highly correlated to the movements in the crude oil markets and has been weighed down by the depressed energy prices across the globe due to the ongoing coronavirus pandemic and the plunge in demand. However, this emerging economy is trying to shift away from its reliance on crude, which could potentially help foster a growth opportunity in other areas of the market.

Given the country’s reliance on oil, investors should note that KWT’s holdings don’t include any significant exposure to the energy industry since most of the oil sector is controlled by the government.

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