16 February 2007
ADCB Launches The First Index Fund in the Middle East
Abu Dhabi, 12 February 2007: Abu Dhabi Commercial Bank is pleased to announce the formal launch of its ADCB MSCI UAE Fund, the first index fund of its kind in the Middle East. Index funds, also known as passive funds or tracker funds, track the movement of market indices to deliver returns that closely match those indices.
"As the regional GCC equity and capital markets continue to grow, so too has the demand for more diverse and innovative solutions to meet the growing sophistication of investors. With this in mind, Abu Dhabi Commercial Bank is leading the way on a wide range of funds initiatives in the UAE and the broader region" said Ahmed Barakat, Head of Wealth Management Products at ADCB. "A particular success for the bank is its mutual funds range whose increased appeal can be attributed to easy access to any market. Today as individuals become more affluent, professionally run products are central to preserving wealth and to growing it over time. Mutual funds offer that option while being cost effective, transparent, and regulated by renowned agencies".
"This Fund offers investors a unique, low cost, and liquid way to invest in the UAE equity markets", said Mohammed Salih Al Hashemi, Fund Manager, ADCB. "In essence, the objective of index funds is to closely track the index to which they are benchmarked while keeping costs to a minimum". "This fund will track the Morgan Stanley Capital International (MSCI) UAE index of companies which comprises selected stocks listed on the Abu Dhabi Securities Market and the Dubai Financial Market". "To achieve its investment objective, an index fund is managed through quantitative techniques such as optimization, stratified sampling, or full/partial replication, which differ from methodologies that underlie active-risk funds, such as fundamental analysis, for example". "The methodology employed in the management of an index fund is driven by considerations including liquidity, number of stocks in the index to be replicated, and the fund’s investment guidelines".
“We are delighted to have licensed Abu Dhabi Commercial Bank for the creation of a passive fund on the MSCI UAE Index,” said Jim Leggate, Executive Director, MSCI Barra, “This is an important step in the continued growth of MSCI Barra’s business in the Middle East region”.
The Fund is sponsored and managed by ADCB. The initial subscription period ends on [28 February 2007], with ongoing subscriptions and redemptions thereafter on a daily basis at the prevailing NAV. The minimum amount of investment that can be made by an investor in the Fund is AED 100,000. There is no lock-in period for investments in the Fund.
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