iShares MSCI UAE ETF (UAE)

iShares MSCI UAE ETF (UAE)

Profile

Focus: The iShares MSCI UAE ETF seeks to track the performance of the MSCI United Arab Emirates 20/35 Index, giving investors exposure to large and mid-cap stocks in the United Arab Emirates.

Asset Allocation: As of October 26, 2023, the ETF's top three sector allocations are Financials (49.01%), Energy (21.64%), and Materials (12.07%). The top ten holdings account for approximately 65.06% of the portfolio.

Investment Strategy: This ETF employs a passive management strategy, aiming to replicate the performance of its benchmark index as closely as possible.

Objective

The primary investment goal of the ETF is to provide long-term capital appreciation by tracking the performance of the MSCI United Arab Emirates 20/35 Index. However, it might also generate income in the form of dividends.

Issuer

BlackRock: BlackRock is the world's largest asset manager, overseeing trillions of dollars in assets in various investment products worldwide, including ETFs. BlackRock has a strong reputation for reliability and expertise in the financial industry.

Management: The ETF is actively managed by a team of experienced portfolio managers within BlackRock's iShares division, renowned for its expertise in index tracking and ETF management.

Market Share & Total Net Assets

Market Share: iShares MSCI UAE ETF is the largest UAE-focused ETF listed in the US, with a market share of approximately 91.91% as of October 26, 2023.

Total Net Assets: $472.96 Million as of October 26, 2023.

Moat

Large Issuer: BlackRock's size and scale provide significant resources and infrastructure for developing innovative and cost-effective ETF products.

First-mover Advantage: The ETF benefits from being the first mover in the US-listed UAE ETF market, securing a substantial market share and brand recognition.

Financial Performance

Historical Returns: Since its inception in May 2014, the ETF has generated annualized total returns of 10.46%.

Benchmark Comparison: The ETF has outperformed its benchmark index, the MSCI United Arab Emirates 20/35 Index, by an average of 0.56% annually over the same period.

Growth Trajectory

The UAE's economy is expected to benefit from rising oil prices, increased government spending on infrastructure projects, and a growing tourism sector. These factors can potentially drive the growth of the UAE stock market, positively impacting the ETF's future performance.

Liquidity

Average Trading Volume: 76,995 shares per day.

Bid-Ask Spread: 0.09% (as of October 26, 2023).

Market Dynamics

Positive Factors: Rising oil prices, economic diversification efforts, and infrastructure development projects.

Negative Factors: Geopolitical risks in the region and potential volatility in global oil prices.

Competitors

Key competitors with their stock symbols and market share percentages include:

• VanEck Merk ETF (UAE): VUAE - 7.96%.

Expense Ratio

The ETF's expense ratio is 0.66%.

Investment Approach & Strategy

Strategy: The ETF passively tracks the MSCI United Arab Emirates 20/35 Index.

Composition: The ETF mainly invests in UAE-listed large and mid-cap stocks across various sectors, including financials, energy, and materials.

Key Points

• Largest UAE-focused ETF in the US.
• Strong reputation and long-term track record.
• Benefiting from UAE's economic growth potential.
• Passively managed.
• Relatively low expense ratio.

Risks

• Volatility: The ETF's value can fluctuate considerably due to market movements and geopolitical events.
• Market Risk: The UAE stock market is influenced by oil prices, regional instability, and global economic factors.
• Currency Risk: The ETF's value is exposed to fluctuations in the US dollar’s exchange rate against the Emirati Dirham.

Who Should Consider Investing?

This ETF might be suitable for investors seeking:

• Exposure to the U.A.E. stock market.
• Long-term diversification within an emerging market portfolio.
• Exposure to potential growth opportunities in the U.A.E. economy.
• Passively managed exposure to UAE equities.

However, investors should be aware of the associated risks mentioned beforehand.

Fundamental Rating Based on AI

Analysis: Using an AI-based rating system considering BlackRock's strong reputation, the ETF's dominant market share, historical performance, potential growth in the UAE market, and relatively low expense ratio, we rate iShares MSCI UAE ETF an 8 out of 10.

Justification: Although subject to volatility and market risks inherent to emerging markets, the ETF provides a convenient and cost-effective strategy for gaining exposure to the growing UAE market within a diversified portfolio.

Resources & Disclaimers

Data Sources:

• iSharesMSCI UAE ETF Website
• Morningstar
• BlackRock.com

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.