Daily ETF Watch: Saudi Fund Launches Today

Today iShares is rolling out the first ETF to focus exclusively on Saudi Arabia. The iShares MSCI Saudi Arabia Capped ETF (KSA) will make its debut on the NYSE Arca with an expense ratio of 0.74 percent.

Although the fund’s underlying index is calculated by MSCI and the country is classified as an emerging market, Saudi Arabia is not included in MSCI’s Emerging Markets Index. Instead, the country index is calculated as a stand-alone benchmark.

This has been due mainly to the country’s restrictions on international investment; however, in June, the Saudi stock market was opened up to foreign institutional investors, so the country’s status in the MSCI indexes and other index families could undergo some changes. It was the ability of foreign investors to invest directly in equities listed on the Tadawul exchange that made an ETF based on the market feasible. Indeed, the iShares fund’s prospectus actually says the fund would only launch once Saudi Arabia eased its investment restrictions on foreigners.

KSA’s underlying index limits the weight of any single stock to a 25 percent weighting and the total weight of all component stocks with weightings of 5 percent or more to 50 percent of the index. The prospectus notes that the fund will include large-, mid- and small-cap companies and will have higher concentrations in the financials, materials and telecommunications sectors.

Van Eck’s Market Vectors arm also has two Saudi Arabia ETFs in registration.

4 Funds To Close
A recent set of filings details plans by Global X to shut down four of its most unique ETFs. The funds will cease to trade after the market close on Oct. 8, with liquidation expected to occur on Oct. 22.

The four funds are as follows:

• Global X Brazil Financials ETF (BRAF | F-66)
• Global X Central Asia & Mongolia ETF (AZIA | F-28)
• Global X Guru Small Cap ETF (GURX | D-54)
• Global X Junior Miners ETF (JUNR | F-24)

Each of the four funds had less than $3 million in assets under management.

The latest announced fund closures bring the number for 2015 so far to roughly 85; that’s about as many closures as there were in all of 2014.

Contact Heather Bell at [email protected].