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A new ETF has just been launched onto the market for investors who want to get exposure to the Kuwaiti stock market. It fills a gap in the available ETF options for investors interested in the Middle East as a potential growth story. The KMEFIC FTSE Kuwait Equity UCITS is launching on both the London Stock Exchange and Borsa Italiana this month.

This launch is a significant milestone for the European ETF industry, representing the first time that a Middle Eastern asset manager has advised and sponsored an ETF in Europe, the first ETF from KMEFIC and the only UCITS ETF to provide targeted exposure to Kuwait.

By tracking the FTSE Kuwait All-Cap 15% Capped Index, the KMEFIC FTSE Kuwait Equity UCITS ETF enables investors to gain exposure to 13 Kuwaiti companies with a combined market capitalisation of $US14.6 billion. Constituents are capped at 15% during a semi-annual rebalance to reduce concentration in larger-cap securities. The ETF has a TER (total expense ratio) of 80bps.

Kuwait was recently promoted to “Emerging Market” status by index provider FTSE Russell in their annual country classification review. The Gulf nation is currently undergoing an economic overhaul to reduce dependency on oil revenues, attract greater foreign investment and expand the private sector.

Adel Fahed Al Humaidhi, Chief Executive Officer, KMEFIC, said:

“The Kuwait and Middle East Financial Investment Company has always striven to be an innovator in the financial landscape of Kuwait. KMEFIC aims to be a leader in breaking down barriers to investments in Kuwait’s equity markets. We hope that this product will be the first of many that will allow foreign investors to participate in Kuwait’s vibrant emerging economy.”

The launch is the first in the European ETF universe for a Middle Eastern asset manager and represents an interesting play for the more sophisticated investor interested in single country investments in the region.

Boursa Kuwait, the local stock market, adopted FTSE Russell’s Industry Classification Benchmark (ICB) in June 2018. This is a widely accepted benchmark that means an exchange is adhering to international standards that includes enhanced transparency. It is regarded as essential if a stock exchange is going to be considered to institutionally appropriate benchmarks like those provided by FTSE Russell.

KMEFIC is a well-established Middle East fund manager which used to be part of the Bank of Kuwait and the Middle East before it was spun off in the 1980s. It has been responsible for the listing of REITs in the US as well as offering the trading of US and Kuwaiti shares on a single trading platform.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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