Abu Dhabi: The Gulf's first exchange traded fund (ETF), tracking the UAE's 25 most active stocks, will begin trading on the Abu Dhabi Stock Exchange (ADX) Thursday, one trading day ahead of another ETF to be launched in Saudi Arabia.

The fund, launched by National Bank of Abu Dhabi (NBAD), will be available to UAE nationals and foreigners with a minimum investment of Dh500,000. Retail investors can buy shares through brokerage houses with no minimum requirement, NBAD officials said yesterday.

"This ETF will allow a whole new type of investor to enter our market," ADX Chief Executive Officer Tom Healy said. "Those are investors who cannot afford to monitor properly smaller markets."

Like other regional equity markets ADX has been looking to attract institutional investors from abroad to help limit volatility. Institutional investors account for almost 40 per cent of trading in Abu Dhabi, ranking the market among the top three in the Middle East, according to recent ADX figures.

Listed

The NBAD OneShare Dow Jones UAE 25 ETF is made up of stocks listed on ADX, Dubai Financial Market and Nasdaq Dubai. ADX shares make up 53 per cent of the index, while financial and real estate stocks account for 56 per cent. No single stock will be allowed more than an 8 per cent share in the fund, according to a NBAD statement.

Whereas the value of mutual funds is calculated once a day, shares in the ETF will be listed on ADX and trade like other securities, sponsors said yesterday. The Dow Jones UAE 25 Index is down 9 per cent since January 1 and up 35 per cent in the past year.

NBAD's fund, under development since early 2008, is backed by The Bank of Ireland. NBAD said today's launch is the first in a series of planned ETFs to be announced.

"We could have cut corners," said NBAD Chief Investment Officer Alan Durrant. "But we decided from the start if something was worth building, it was worth building right."

Saudi Arabia's Falcom Financial Services on Sunday will offer the kingdom's first ETF, which will be open to local and foreign investors, according to a Falcom statement on the Saudi stock exchange.