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ETF

Exchange-Traded Funds, or ETFs, are investment funds similar to a basket of holdings. They trade on stock exchanges throughout the day, just like individual stocks. ETFs offer investors a way to gain exposure to various asset classes, including stocks, bonds, and commodities. There are two primary flavours of ETFs: index-tracking and actively managed.

 

Index Trackers: Following the pack

Index-tracking ETFs take a more passive approach to investing. They aim to replicate the performance of a specific index, providing returns that closely mirror the index's overall performance over time. In other words, they're like a mirror reflecting the index's movements.

 

Actively Managed ETFs: Taking the wheel

Actively managed ETFs are ETFs in which the manager makes investment decisions for the portfolio without being subject to the set rules of an index. They are not bound by the rigid rules of an index. The manager's goal, as outlined in the ETF's investment objective, is to outperform a benchmark index or achieve long-term capital growth for investors.
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BENEFITS OF LISTING

  1. It is more accessible to small investors, as they get exposure to all individual shares included in an ETF's index.
  2. Provide easier access and a broader range of investment opportunities.
  3. Index-based ETFs provide diversification, similar to an investment fund, and are traded like stocks on the Exchange.
  4. ETFs provide constant liquidity due to the ability to allow the creation of new ETF units through designated participants.  
  5. ADX, the most liquid market in the UAE, boasts an impressive 12 listings as of March 2024. 
  6. It has the highest traded value in the GCC, making it a key player in the regional market.
  7. ADX offers issuers unrivalled access to more than one million UAE investors with the convenience of ADX infrastructure.

 

Issuance Process

End-to-end platform for ETF issuers from IOPs to Listing of ETFs

  1. Subscription through ADX eIPO for all investors with UAE bank access

  2. Authorized participants buy a basket of securities under CHINDSHI and confirm the creation of units 

  3. Settlement of ETF units at ADX

  4. ADX credits respective units to investor accounts

  5. Listing of ETF in ADX

  6. ETF units are available for trading in the Growth Market via ADX