Van Eck Launches Plans For Saudi Arabia ETFs

Includes: GAF, GYLD, HYEM, MES
by: Stoyan Bojinov

Investors on Wall Street have endured a grueling week as political turbulence in the overseas currency bloc paved the way for volatile trading and rampant profit taking. On the product development front, ArrowShares made its entrance into the ETF industry with the launch of the Dow Jones Global Yield ETF (NYSEARCA:GYLD). Van Eck beefed up its fixed income product lineup with the launch of the Market Vectors Emerging Markets High Yield Bond ETF (NYSEARCA:HYEM), while also drafting plans to roll out a pair of Saudi Arabia ETFs.

New York-based veteran Van Eck has filed with the SEC for two Saudi Arabia ETFs, making this a first-to-market proposal:

  • Market Vectors Saudi Arabia ETF: This ETF seeks to replicate the price and yield performance of the Market Vectors Saudi Arabia Index. The underlying index is comprised of companies that are domiciled and publicly traded in the country, or generate at least 50% of their revenues from Saudi Arabia. The filing also specifies that exposure will be concentrated in the financial services and basic materials sectors [see SEC Filing].

  • Market Vectors Saudi Arabia Small-Cap ETF: This ETF seeks to replicate the price and yield performance of the Market Vectors Saudi Arabia Small-Cap Index, offering investors a compelling way of tapping into the local economy of this growing Middle Eastern nation. The underlying index has the same requirements for inclusion as the previously mentioned broad Saudi Arabia ETF; the distinguishing feature is that this ETF is focused on small cap securities, although it isn't exactly clear how much overlap, if any, there will be between the portfolios of the two proposed funds [see SEC Filing].

Both SEC filings go into detail about the risks associated with investing in the Middle East as opposed to developed markets.

Middle East ETFs In Focus

The proposed Van Eck offering will join the group of five Middle East ETFs currently available. The biggest of the bunch is the SPDR S&P Emerging Middle East & Africa ETF (NYSEARCA:GAF) which has accumulated close to $97 million in assets under management since debuting in early 2007. Van Eck already has a presence in this space with the Market Vectors Gulf States Index ETF (NYSEARCA:MES). However, it should be noted that none of the available Middle East ETFs feature meaningful exposure to Saudi Arabia.

Disclosure: No positions at time of writing.

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