ADS Investment Solutions launches Saudi Arabian smart beta fund

Wednesday 19 June 2019
Abu Dhabi - MENA Herald:

ADS Investment Solutions (ADSI), the Abu Dhabi-based asset manager, has launched a Saudi Arabian smart beta fund to meet growing demand for exposure to the Middle East’s biggest and fastest-changing economy.

To meet demand for reduced-volatility and low-cost access to Saudi Arabian equities, ADS Investment Solutions - part of the ADSS Group of companies - is collaborating with index provider FTSE Russell. The FTSE ADS Custom Minimum Variance Index, which follows a smart beta, rules-based equity strategy that minimizes portfolio volatility, was jointly created in 2018 ahead of the launch this week of the FTSE ADS Saudi Minimum Variance Fund, which tracks the index.

The US dollar-denominated fund is domiciled in the UAE capital’s financial centre, Abu Dhabi Global Market, and offers daily liquidity with one of the lowest annual management fees for a Saudi equity fund, at 0.40%.

Dr. Ryan Lemand, Senior Executive Officer and Board Member, ADS Investment Solutions:

“Our wealth management and asset management clients are hungry for high-quality access to Saudi Arabian equities at a time when the economy is going through many positive changes. We have responded with the launch of the FTSE ADS Saudi Minimum Variance Fund, which is our first step in making smart beta strategies widely available to investors in the region. The fund’s strategy reflects the strength of ADSI’s quantitative investment capabilities and quality of its partnerships, with this being the first ever Saudi Arabia-focused fund launched in collaboration with FTSE Russell.”

 As a result of capital market infrastructure upgrades, Saudi Arabia has been included in key emerging markets indices since early 2018. As part of Saudi Vision 2030, the country is experiencing major economic reform and has shown commitment to improving Saudi Arabia’s regulatory standards and capital markets infrastructure, resulting in promotion to Emerging Market status by FTSE Russell. The projected passive inflows into the Saudi stock market from recent inclusion in the FTSE Global Equity Index Series are estimated to be around US$6-7 billion1. Investors are also drawn by major reforms that aim to stimulate domestic demand and diversify economic activity.

The FTSE ADS Custom Saudi Minimum Variance Index was launched in May 2018, just two months after FTSE Russell upgraded the Saudi Arabian Tadawul market to emerging market status. The index uses the components of the FTSE Saudi Arabia All Cap Index while rebalancing their weighting to minimise volatility, based on historical return information.

Gary Rynhoud, Head of Middle East and Africa, FTSE Russell: 

“We are delighted to collaborate with ADS Investment Solutions, and to support the development of the local capital markets in the Middle East. Saudi Arabia’s recent promotion to emerging market status and inclusion into the FTSE Global Equity Index Series further highlights the growing demand for investment in the region. This collaboration will offer investors access to a fast-growing market and we will continue to create innovative solutions to meet the requirements of our global clients.”

1 Source: FTSE Russell based on global AuM per end of June 2018

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