DOHA: Qatar’s second listed exchange traded fund (ETF), the Al Rayan Qatar ETF (ticker QATR), will begin trading from tomorrow on Qatar Stock Exchange (QSE). Al Rayan Qatar ETF is the first Shariah-compliant exchange traded fund listed on QSE.
The ETF, issued by Masraf Al Rayan, will track the QE Al Rayan Islamic Index (Price). The Fund will track the performances of 18 stock index of Sharia-compliant Qatari listed equities.
Al Rayan Investment is the Fund Manager. The Group Securities will act as the Liquidity Provider (LP) for the ETF.
HSBC Bank Middle East LTD is the Investment Custodian. According to the prospectus issued by the
Fund Manager, the Fund is structured as an open-ended vehicle with a maximum limit of issued capital of QR2bn.
The objective is to invest in all Index constituents in proportions equal to that of the Index.
The Index is comprised of large and medium sized, Shari’a-compliant, listed Qatari companies that meet eligibility criteria of the QSE.
The base currency of the Fund is Qatari Riyal and the Fund will only invest in securities denominated in Qatari Riyal, the Fund Manager noted in the prospectus.
Post listing, annual charges paid will be capped at 0.5 percent of the Total Net Asset Value.
These charges shall include the cost of managing the Fund and those related to custody, administration, distribution and other miscellaneous expenses.
The Fund’s performance shall reflect the impact of these charges.
The Fund will distribute dividends at least once a year, net of expenses and purification. As such, the dividend yield for the units will be below that of the Index.
The Fund Manager will determine the distribution form, amount and dates, according to the Prospectus.
The Fund Manager said equities are high risk investment instruments. Despite the inherent risk of the Fund, investors will benefit from the diversified exposure of the Index, than may be achieved with a single trade.
The Fund may not be appropriate for short-term investment. The insolvency of any institution which provides fund services, such as safe keeping of assets, may expose the Fund to financial loss. On the Liquidity risk the
Fund Manager elaborated that the lower liquidity means there are insufficient buyers and sellers to allow the Fund to sell or buy securities easily. In such an event, the Fund Manager’s ability to track the performance of the index will be impacted.
On the Index tracking risk, the Fund Manager explained that tracking risk is the annualised standard deviation of daily return differences between the performance of the Fund and that of the Index.
Fund returns will be reduced by transaction costs and other expenses which are not reflected in the performance of the Index.
