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• MSCI UAE IMI 10/40 new benchmark index
• ETF renamed NBAD OneShare MSCI UAE ETF
• Two weeks suspension to implement enhancement; 1UAE resumes trading on November 25th
The National Bank of Abu Dhabi (NBAD), the Number One Bank in the UAE, will implement enhancements to the region’s first exchange trade-fund (ETF), the NBAD OneShare Dow Jones UAE 25 ETF (1UAE), all of which are in step with advances in the industry.
The enhancements to the ETF, which resulted from consultations with regional and international investors, brokers, and authorised participants, will shift the benchmark provider to MSCI UAE IMI 10/40 Index from Dow Jones UAE 25 Total Return Index (Local); and will also move to physical replication from swap based replication.
The changes to the investment objective and investment policies of the ETF whereby the name of the ETF will be changed to the NBAD OneShare MSCI UAE ETF were approved in the Extraordinary General Meeting which was held on 25th September 2012.
Under the new ETF, there will be no impact on the number of shares which are held by the existing investors in the Fund who are listed in the share register held with Abu Dhabi Securities Exchange (ADX) as on November 8, 2012.
“The improvements NBAD will implement to this ETF would increase the scalability of the fund and should appeal to sophisticated and retail investors alike,” says Saleem Khokhar, the Head of Equities at NBAD’s Asset Management Group. “MSCI is the number one index provider with 25.8% Global ETF market share. It is envisaged that a futures market for the MSCI UAE IMI 10/40 index will become available in the near to medium term.”
Mr. Khokhar continues: “We also believe physical replication would increase scalability and remove restrictive collateral requirements. International authorised participants in particular have stated a strong preference for a physical ETF structure over a swap based structure.”
The Fund, which trades on the Abu Dhabi Securities Exchange (ADX), will be renamed NBAD OneShare MSCI UAE ETF. It will continue to trade under the ticker symbol 1UAE.
In order to implement the required changes to 1UAE structure, the ETF will be required to suspend trading for a short period from November 11, 2012 to November 22, 2012. 1UAE will resume trading on November 25, 2012.
NBAD also plans to implement cross-selling of 1UAE on Euronext/LSE to allow it to be traded in different time zones, thus increase its reach and activities.
The NBAD OneShareDow Jones UAE 25 ETF is the region’s first ETF. It began trading on March 25, 2010 on ADX. The performance of the Fund year to date has been strong with a return of 28.54% as at end of October 2012.
The NBAD ETF seeks to provide long term capital appreciation through the replication of the performance of MSCI UAE IMI 10/40 Index which is based on UCITS compliant MSCI 10/40 index methodology. The Index is comprised of leading stocks which trade in the United Arab Emirates. Only stocks which meet minimum liquidity standards are eligible for consideration.
“NBAD Asset Management Group continuously strives to provide best in class investment products and the latest enhancements to the NBAD ETF remain consistent with our long term goals and objectives,” says Mr. Khokhar.
Northern Trust acts as the Administrator and Custodian for this ETF.
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