National Bank of Abu Dhabi (NBAD) has launched the first exchange traded fund (ETF) in the Gulf region today (March 24).

The new fund, NBAD OneShare Dow Jones UAE 25 ETF, will be listed on Abu Dhabi Securities Exchange (ADX) from tomorrow (March 25), inaugurating the new ETF market in Abu Dhabi.

The new fund will follow the performance of the ‘Dow Jones UAE 25 Total Return Index’ and provide investors with exposure to 25 blue-chip companies from across the UAE.

Listing the ETF at ADX will offer investors the opportunity to buy and sell as the case is with any other share.

'I am proud of the fact that NBAD is the first bank to launch an ETF in the region,' said Michael Tomalin, group chief executive of NBAD.

Tom Healy, ADX’s chief executive, welcomed this major milestone in the development of the Abu Dhabi and regional capital markets. He said that since the introduction of the first ETF in the United States in 1993, ETFs have opened a whole new landscape of investment opportunities for both institutional and private investors, both local and foreign.

He added that the main advantages of ETFs are that investors can achieve diversified portfolios with lower transaction costs than purchasing the relevant range of underlying shares; and that ETFs have significantly lower expense ratios than other funds.

“The Dow Jones UAE 25 Index is a strictly rules-based index that measures the performance of 25 of the largest, most frequently traded and liquid equity securities trading in the UAE. With these index qualities underlying the ETF, local and international investors are offered a transparent and liquid vehicle that provides passive exposure to this attractive market,' added Michael A Petronella, president of Dow Jones Indexes.

He added that the ETF will give investors the opportunity to gain real time, cost-effective exposure to a broad basket of UAE shares. It has the diversification benefits of a mutual fund and the instant liquidity of a share.-TradeArabia News Service