MIDDLE EAST - Pension funds are increasingly demanding investment opportunities in the Gulf region, a survey by exchange traded funds provider Lyxor has shown.
Over the next three years, 50% expect to increase their exposure to the region.
Lyxor revealed the research at the launch of the Lyxor ETF Kuwait, in conjunction with Gulf-based financial institution Coast Investment & Development Company.
This latest ETF from Lyxor is the first to focus on the Gulf region, offering the ability to access the Kuwait market through one single share traded on the London Stock Exchange with an annual total expense ratio of 0.65%.
The ETF will be linked to the FTSE Coast Kuwait 40 Index, which is representative of the Kuwaiti market.
The Index is calculated by FTSE on behalf of Coast Investment and Development Company and was established in February 2007. The three main sector constituents of the index are banking (32%), IT and telecoms (22%) and investments (17%).
Daniel Draper, global head of Lyxor ETF, said: "We are seeing a growing interest from our clients for investment opportunities in the Gulf region. Working with Coast and FTSE, we have focused on our core strengths of being able to offer low total expense ratios (TERs), liquidity and some of the lowest tracking errors in the marketplace to develop the world's first ETF from the Gulf region."
Sulaiman T. Al-Abduljader, vice president, Corporate Finance and Investment Services Group, Coast Investment & Development Company, said: "For the first time, UK and global institutional investors will have direct access to the Kuwait stock market, one of the best performing and stable markets in the Middle East.
"While performance has been strong (up 600% since 2000), the fundamental and economic indicators reveal strong potential for growth in the near and medium time horizons for investors.
"Empirical analysis also shows the diversification benefits the Kuwaiti market provides to a global equity portfolio making the Kuwait ETF an attractive proposition for international and local investors."
Imogen Dillon-Hatcher, managing director, FTSE Group EMEA, said, "We are committed to providing the global investment community with indexing services to meet market demand for access to the GCC region and we are delighted to be involved in the launch of this first ever ETF focusing on the Gulf region."
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