Qatar on Wednesday witnessed the launch of the world's largest single country Islamic exchange traded fund (ETF), which is increasingly seeking investors from Asia, Europe and the US.
Buoyed by the response from domestic investors, Al Rayan Qatar ETF — sponsored by Masraf Al Rayan and whose seed capital came from diversified sources including quasi-government investment firms, family offices and corporates — is planning to create more units to meet the increasing demand.
"As an exchange, we’re delighted that the world’s largest single-country Islamic ETF is available to trade exclusively in Doha," said Rashid bin Ali al-Mansoori, chief executive of the Qatar Stock Exchange (QSE), on which Al Rayan Qatar ETF (QATR) got listed.
It is one of the largest Islamic funds traded in the Middle East and emerging countries as well as the second largest Islamic fund in the world.
The open-ended fund, with initial assets of $120mn, is three times larger than any other ETF in Qatar and Gulf region and has pegged total expense ratio at 0.5% of net asset value, which is considered to be the lowest for any single country ETF in the region.
Dr Hussain Ali al-Abdulla, chairman and managing director of Masraf Al Rayan, said the bank is a forerunner of developing local capital markets by introducing new and innovative products such as QATR, whose underlying index comprises large and medium sized Shariah-compliant listed Qatari companies.
"With the global popularity of ETFs, it was opportune for us to launch this new investment product. QATR is perfect for investors seeking diversified exposure to Shariah-compliant Qatari stocks with the simplicity and efficiency of buying just one share," said Haithem Katerji, chief investment officer of Al Rayan Investment, which is the fund manager for QATR.
The QATR seeks to track the performance of the ‘QE Al Rayan Islamic Index (Price)’ and provides investors diversified exposure to Qatari equities. Over the last five years, QE Al Rayan Islamic Index (Price) has outperformed the conventional ‘QE Index’ by more than 13%; over ten years the outperformance is in excess of 75%.
"Given the strong historic performance of the index, QATR offers an attractive opportunity to gain exposure to the Qatari economy,” Katerji said, adding it expects to hold investor roadshows across the international financial hubs in Asia, Europe and the US.
A total of 2.33mn QATR valued at QR56.36mn changed hands across 1,465 deals, which according to Mohsin Mujtaba, QSE director (Product and Market Development), is an indicator of robust demand.
Finding the growing interests among investors for the QATR, Katerji said Al Rayan Investment is planning to create more units.
Elaborating on the proposed creation of more units, Akbar Khan, senior director, Al Rayan Investment, said the whole index is made up of many baskets (of individual scrips) and "when there is more demand and when people keep buying, as the money comes in, we have to create new baskets."
The Doha office of global law firm K&L Gates has advised Al Rayan Investment on the listing of QATR. "We were able to apply best market practices in order to realise this highly significant ETF listing for a client that is a leader in the Qatari market,” said Amjad Hussain, Doha partner of K&L Gates.