Daily ETF Watch: Qatar, UAE Funds Near

iShares is putting the final touches on two Mideast-focused ETFs.

Reviewed by: Hung Tran
Edited by: Hung Tran

iShares is putting the final touches on two Mideast-focused ETFs.

iShares has put into registration three new ETFs: one covering the fixed-income space, and two equity ETFs focused on Qatar and the UAE—two vibrant countries in the middle of the oil-rich Middle East that will be promoted into the MSCI Emerging Markets Index next month.

Besides setting up the possibility of creating two new single-country ETFs, the promotion of the two countries will also have important implications for iShares’ $35 billion emerging markets fund, the iShares MSCI Emerging Markets ETF (EEM | B-100).

UAE, Qatar ETFs

iShares filed regulatory paperwork to market the iShares MSCI UAE Capped ETF (UAE) to track the MSCI All UAE Capped Index, which is designed to measure the equity market in the United Arab Emirates across a broad range of market cap in the energy, financials and industrials sectors.

In the same vein, the proposed iShares MSCI Qatar Capped ETF (QAT) will track the MSCI All Qatar Capped Index, which is designed to measure the equity market in Qatar, according to its regulatory filing.

Both proposed ETFs have an expense ratio of 0.61 percent, or $61 for every $10,000 invested.

New Expiring ‘iSharesBond’

On the fixed-income front, the company plans to market an iSharesBond Dec 2016 Corporate Term ETF (IBDF) will track the Barclays December 2016 Maturity Corporate Index, which is composed of U.S. dollar-denominated, investment-grade corporate bonds maturing Dec. 31, 2016.

The fund may also invest in other ETFs, U.S. government securities, short-term paper, cash and cash equivalents. It has an expense ratio of 0.10 percent, or $10 for every $10,000 invested, according to its regulatory filing.

The proposed fund comes at a time when equity assets are under pressure, as evidenced by the sell-off in momentum securities in the first quarter as investors continue to grapple with weak economic data both in the U.S. and in China, as well as rising tensions between Russia and Ukraine.


Qatar, UAE Reclassification

Next month, both Qatar and UAE are being reclassified from frontier markets to emerging markets by MSCI, which will be a boon for emerging market investors, according to Russ Koesterich, iShares’ chief global investment strategist.

“Qatar’s and UAE’s equity markets have increased roughly 47 percent and 188 percent, respectively, since the beginning of 2013,” wrote Koesterich, in a recent blog.

“As a result of their previous classification as frontier markets, the broad MSCI Frontier Markets 100 Index has risen roughly 32 percent over the same time period and has outperformed its emerging market counterpart by about 37 percentage points,” he continued.

Qatar and UAE’s inclusion into the emerging markets should serve to boost the performance of EEM, which is down 0.4 percent year-to-date. EEM has experienced outflows of $3.65 billion year-to-date, according to data compiled by ETF.com Analytics.

While some emerging markets, including Turkey, Colombia, India and Indonesia, have rebounded nicely in 2014, others remain under pressure as the Federal Reserve continues to taper its bond-buying program and the China economic behemoth shows signs of a slowdown.

BlackRock Gets Right To Invest In China A-Shares

BlackRock Asset Management North Asia, a subsidiary of BlackRock, has been awarded its first renminbi qualified foreign institutional investor (RQFII) license by the China Securities Regulatory Commission to invest in the domestic capital markets in China, including the much-coveted A-share equity and onshore bond markets.

The RQFII scheme launched in December 2011 to allow Chinese financial firms to establish renminbi-denominated funds in Hong Kong for investment in the mainland with the aim being to enable overseas investors to use offshore renminbi deposits to invest in mainland securities markets.

A number of ETF issuers, including Market Vectors, Deutsche Bank and KraneShares, have paired up with local asset managers in recent months to give investors access to mainland China securities, which are highly regarded as the frontier of the world’s second-largest economy, as well as Hong Kong-listed Chinese securities.


ALPS has put into motion a gold miners ETF at a time when the appetite for the yellow metal is seemingly on the rise from the world’s second-largest economy.

China’s gold demand increased six times over the last 10 years, but will increase further from here, according to the World Gold Council, reports Hard Asset Investor.

After demand hit a record 1,132 metric tons in 2013, the WGC expects “a year of consolidation” for China’s demand in 2014. However, following a pause this year, the council is forecasting renewed growth and at least a 19 percent increase in demand by 2017 to 1,350 metric tons.

The Sprott Gold Miners ETF will track the Sprott Zacks Gold Miners Index, which aims to track the performance of gold and silver mining companies whose stocks are traded on major U.S. exchanges.

Associated fees and tickers for the fund were not made available in the filing.


Hung Tran is a former staff writer for etf.com.