The first exchange traded fund offering investors in Europe exposure to Saudi Arabia has been launched by Invesco. The move comes at a time that investor interest in the Gulf state which opened its stock market to foreign investors in 2015 is increasing.
The Invesco MSCI Saudi Arabia Ucits ETF, will offer investors pure passive exposure to the largest economy in the Middle East. It is available in US dollars on the London Stock Exchange.
The ETF tracks the performance of the MSCI Saudi Arabia 20/35 index – which comprises 22 large- and mid-cap stocks and accounts for around 85% of the free-float market capitalisation in Saudi Arabia. It has an ongoing charge of 0.50 per cent and the minimum investment is one share.
Chris Mellor, head of EMEA ETF equity and commodity product management at Invesco, said that the fund was well placed to take advantages of ongoing liberalisation of Saudi Arabia’s economy.
“Saudi Arabia is in the early stages of an exciting transformation,” he said.
The country is undergoing an economic overhaul in a bid to reduce the dependency from oil revenues. Spearheaded by Crown Prince Mohammed bin Salman, the shift aims to attract more foreign investment and expand the private sector. State owned oil giant Aramco is set to be listed later this year in what will be world’s biggest stock market flotation.
Saudi Arabia is up for review by the MSCI, with an announcement due this week regarding whether it will be included in the important MSCI Emerging Markets index from 2019.
A number of US-listed ETFs which provide exposure of varying degrees to Saudi Arabia already exist.