National Bank of Abu Dhabi to list first exchange-traded fund on stock exchange

25 March 2010

Fund to track Dow Jones index  

National Bank of Abu Dhabi (NBAD) has launched the first exchange traded fund (ETF) on the Abu Dhabi Securities Exchange (ADX).

An ETF is an open-ended investment fund that tracks a specific index. The NBAD OneShare Dow Jones UAE 25 ETF will be the first of its kind in Abu Dhabi.

The new fund will follow the performance of the Dow Jones UAE 25 Total Return Index and provide investors with exposure to 25 major listed companies from across the UAE. It will offer investors the opportunity to buy and sell as is the case with any other share.

Tom Healy, ADX’s chief executive, said that since the introduction of the first ETF in the US in 1993, the funds have opened a new landscape of investment opportunities for both institutional and private investors, both local and foreign.

He added that the main advantages of ETFs are that investors can achieve diversified portfolios with lower transaction costs than purchasing the relevant range of underlying shares, and that ETFs have significantly lower expense ratios than other funds.

“The Dow Jones UAE 25 Index is a strict rules-based index that measures the performance of 25 of the largest, most frequently traded and liquid equity securities trading in the UAE,” said Michael A Petronella, president of Dow Jones Indexes.

The ETF will give investors the opportunity to gain real time, cost-effective exposure to a broad basket of UAE shares.

On 17 March, Saudi Arabia approved its first ETF, which will be accessible to foreigners, marking a significant milestone in efforts to open up the kingdom’s stock exchange, the Tadawul.

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