(MENAFN- The Peninsula) Exchange Traded Funds (ETFs) have seen a tremendous uptake globally since its introduction to the market and five percent of ETF assets in Europe are coming from the Gulf region, an expert said.
Robert Broadwell, regional business director of iShares (part of BlackRock, formerly Barclays Global Investment), said during a seminar held recently at the Doha Sheraton Hotel that ETF assets in Europe come from the Gulf region.
Broadwell said a growing number of investors recently prefer ETFs due to their simplicity and reduced risk factor. ETF is an investment vehicle constructed like a mutual fund but trades like an individual security on a stock exchange.
According to him, ETFs combine many of the benefits of traditional mutual funds, but are not to be confused with close-ended mutual funds that also trade on an exchange.
"The ETF units can be created or redeemed by authorised participants as required and as ETFs are listed on stock exchanges just like a share, they can be traded whenever the exchange is open." Broadwell said ETFs are safe and effective because they make ideal hedging tools, can be traded in real time, and offer immediate exposure to market.
Globally, ETFs have seen a tremendous uptake since they were first introduced to the market in 1993 with 3 products covering $0.8m assets under management (AUM).
At the end of Q2 2009 the Global ETF industry had 1,707 ETFs with 3,066 listings, assets of $789.04bn, from 93 providers on 42 exchanges around the world with plans to launch an additional 777 new ETFs. Globally, iShares is the largest ETF provider in terms of number of products, 386 ETFs, and assets of $380.23bn, reflecting 48.2 percent market share, said Broadwell.
"We have seen a flurry of news in the GCC financial press about ETFs, but many people do not know what an ETF actually is, let alone how it is used. That is why we are here… we are travelling to educate the investors in the region, as well as the media," said Norah Alyusuf, iShares vice president.
GCC-based investment professionals are using ETFs in multiple ways.
"One of the key uses for ETFs is combining different asset classes in the core of investment portfolios with actively managed funds or single stock selections.
"The result is a blend of active and passive management that can be tailored to best fit an optimal asset allocation and a client's risk profile. GCC based professional investors are also significant users of ETFs for tactical trading strategies, which typically include specific sector, single country or emerging market ETFs," said Broadwell.
By Joyce C Abano
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