Daily ETF Watch: Saudi Stock Fund Nears

The iShares MSCI Saudi Arabia Capped ETF appears to be nearing launch, perhaps as early as mid-June, the date the Saudi stock market is set to open to foreign investors. That long-awaited market opening was a prerequisite to the launch of the fund, the first of its kind.

It is, again, the first stand-alone fund focused exclusively on Saudi Arabia, although both Van Eck’s Market Vectors and Global X have Saudi Arabia funds in registration. A possibly underappreciated aspect of the oil-rich country is that many of its energy-related firms won’t be accessible to investors, as most of the energy holdings are firmly controlled by the Saudi royal family.

Still, the Saudi market is estimated to have total market capitalization of $530 billion, or twice as big as the market value of Israel’s Tel Aviv exchange. The Saudi market will officially be open to foreigners on June 15. That move was widely expected to be accompanied by the launch of ETFs like this one from iShares.

The underlying index is a free-float-adjusted market-capitalization-weighted index with a capping methodology applied to issuer weights. It is designed such that no single issuer of a component exceeds 2 percent of the underlying index weight, and all issuers with a weight above 5 percent don’t exceed 50 percent of the underlying index weight.

The ticker and the expense ratio of the fund weren’t immediately available.