Investment manager Masraf Al Rayan has launched the Al Rayan Qatar ETF (QATR QD) on Qatar Stock Exchange, providing exposure to local equities from Sharia-compliant firms.
Masraf Al Rayan launches Sharia-compliant Qatar equities ETF.
Adel Mustafawi, chief executive officer of Masraf Al Rayan, commented, “Having the largest Sharia-compliant single country ETF in the world is a testament to the trust our clients have in Masraf Al Rayan. We are extremely grateful for the support of our investors and look forward to the success of QATR and the Qatari capital markets.”
QATR tracks the QE Al Rayan Islamic Index which is composed of large- and mid-cap equities.
The Sharia screening methodology of the index is based on a fatwa issued by Al Rayan’s Sharia Supervisory Board.
Sharia investment principles do not allow investment in companies deriving significant income from interest from lending or companies who have excessive leverage.
In addition to screening companies based on financial ratios, the index avoids companies involved in activities contrary to the principles of Sharia investment. These typically include companies which derive revenue from products and activities such as alcohol, tobacco, pork-related products, conventional financial services, gambling, adult entertainment and weapons.
A third of the index’s total exposure is in banking and financial services companies with the next largest sectors being industrials (28%), real estate (18%) and consumer goods (11%). There are 18 holdings in total. The ETF’s provider, Masraf Al Rayan is the fund’s largest holding at 15%, followed by Industries Qatar (12%), Barwa Real Estate (10%) and Qatar Islamic Bank (8%).
The index is reviewed twice a year in April and October. Over the last five years, it has outperformed the conventional QE Index – a market cap-weighted index of the 20 largest and most liquid companies traded on the Qatar Exchange – by more than 1.6% per annum.
“As an exchange we’re delighted that the world’s largest single-country Islamic ETF is available to trade exclusively in Doha,” said Rashid Ali Al-Mansoori, CEO of the Qatar Stock Exchange. “Al Rayan Investment has a strong reputation in asset management locally and the index itself makes for a Sharia-compliant investment strategy and diversification for QSE investors.”
Haithem Katerji, chief investment officer of Al Rayan Investment, added, “After a considerable period of work behind the scenes we are very proud to have launched QATR today. We have given all investors access to an excellent investment product which currently has a dividend yield of more than 5%. The best way to invest across Qatari shares is via QATR.”
Dividends will be distributed to investors on an annual basis.
The ETF’s total expense ratio (TER) is 0.50%.
The fund appears to have been well met by investors with 56 million Qatari riyal ($15.3m) worth of QATR’s stock traded on its debut which accounted for 20% of total exchange volumes on the day.