Abu Dhabi-based Chimera Capital has announced that its Chimera S&P UAE Shariah Exchange Traded Fund has surpassed AED100 million ($27.2m) in assets under management (AUM) amid growing demand for ETFs in the region.
The asset management firm’s fund, the MENA region’s third-largest equity ETF, recorded strong investor demand early on and crossed the AED50m AUM mark in six months from its launch – a clear sign of the growing regional interest in ETFs.
“The rapid growth is testament to the increasing investor appetite for innovative investment tools such as ETFs, and it is also a reflection of the product’s robust and highly regulated structure,” said Syed Basar Shueb (pictured below), chairman of Chimera Capital.
He added that while the market for ETFs in the region is still in its emerging stages, Chimera Capital is “highly optimistic about its growth potential”.
“While globally the ETF industry has grown to over $9 trillion in AUM, the ETF market in the UAE and the wider Middle East is in a very nascent stage,” Sherif Salem, chief investment officer, Public Markets at Chimera Capital, told Arabian Business.
“ETFs listed in MENA equity markets are approximately $330m, and there are MENA-focused ETFs listed on US and UK markets with AUMs of close to $1.3 billion. The number of ETFs based on MENA assets is also extremely small with only a few locally listed ETFs. There are currently ten equity ETFs listed on the MENA markets; four are managed by Chimera and listed in the UAE, three in Saudi Arabia, two in Qatar and one in Egypt, making Chimera the largest issuer of equity ETFs in the region,” he continued.
The Chimera S&P UAE Shariah ETF, which tracks the S&P UAE Domestic Shariah Liquid 35/20 Capped Index, had listed on the Abu Dhabi Securities Exchange and Dubai Financial Market back in July 2020 with AUM of AED2m.
Investors have benefited from the ETF’s performance in its first year, with net asset value increasing by over 47.3 percent as of the end of July 2021, in line with the index’s return of 49.3 percent over the same time period (a tracking error of 1 percent plus a total expense ratio 1 percent).
Sherif Salem, chief investment officer, Public Markets at Chimera Capital.
When asked what is limiting the growth of ETFs in the GCC, Salem said: “There are few locally listed ETFs in the region due to the absence of laws and regulations surrounding the ETF settlement cycle.”
“The ETF industry is also a low cost, low margin business that many view as a heavy barrier to entry. Another reason is that long-term institutional investors like pension funds, university endowments, and sovereign wealth funds, do not have a targeted allocation to regional equity markets. But additionally, there is also a lack of regulations around authorised investment advisors who advise clients on an optimal asset allocation to meet their investment needs,” said Salem.
Having seen traction and AUM growth, Chimera Capital, a wholly-owned subsidiary of Chimera Investment LLC, launched a new sub-fund, the Chimera S&P UAE UCITS ETF, in February 2021.
Listed on both the ADX and DFM, Chimera Capital’s newest ETFs track the S&P UAE BMI Liquid 20/35 Capped Index.
Follow us on
