Dubai: The Middle East market would witness growing interest in structured products like Exchange Traded products (ETP) in 2015, Standard & Poor’s Dow Jones Indices told Gulf News.
Currently there are about 6 ETP’s in the Middle East traded in the United States, and Blackrock, the world’s biggest money manager, plans to start an ETP for Saudi Arabian shares. The fund plans to hold 25 per cent or more of its total assets in a particular industry or group of industries to approximately the same extent that the underlying index is concentrated.
“In 2015, we expect the growing interest in ETPs to continue globally and notably in Latin America, Middle East and Africa. In terms of the types of ETPs investors are likely to be interested in, we continue to see a trend of people seeking yield, dividends, low volatility and factor-based passive funds,” John Davis, Global Head of ETP Licensing at S & P Dow Jones indices told Gulf News.
Fund managers and banks are in talks with S & P Dow Jones Indices to launch an Exchange Traded Fund (ETF).
S & P Dow Jones Indices has been running an ETF currently in Saudi Arabia with HSBC for the past three and a half years that invest in top 20 Sharia-compliant companies. The assets under management (AUM) is currently at about $20-30 million (Dh73.4-110.1 million).
Tremendous growth
The total asset under management of ETP’s reached $781 billion as of December 12 from more than 600 such funds, representing a 20 per cent increase over 2013.
This represents around 25 per cent of ETF issuers globally have a product based on an index published by S & P DJI.
“S & P Dow Jones Indices has seen tremendous growth in our ETP licensing business across various asset classes and regions in 2014,” said Alexander Matturri, CEO of S & P Dow Jones Indices.
“Through our close working relationships with ETF providers, unrivalled leadership position in teaming with the world’s leading exchanges, and success this year in expanding into emerging and frontier markets, not only are we anchored as the index provider of choice for market participants but are firmly positioned to continue to grow our business and global position in 2015 and beyond,” Matturri said.
S & P DJIA (Dow Jones Industrial Average) factor-based indices currently underlie over $70 billion in ETP AUM, which represents an increase of approximately 35 per cent over 2013. Most recently, S & P DJIA launched the S & P Momentum Indices, a brand-new factor-based index family designed to measure the performance of securities in the global equity markets that exhibit persistence in their relative performance. The momentum factor reflects the theory that relative strength strategies that rank stocks based on their past returns predict relative performance over the next 3-12 months.
