Exchange Traded Funds (ETFs)

In line with the DFM strategy to provide investors with innovative and diversified investment products, the DFM provides a favorable regulatory framework for the listing and trading of Exchange-Traded Funds (ETFs), which are open-ended investment funds listed and traded on a stock exchange.
An ETF combines the features of an index fund and a share. The liquidity of an ETF reflects the liquidity of the underlying basket of shares which the ETF is created upon. ETFs allow investors to take exposures in the underlying assets of an ETF in a cost-effective manner without having direct exposures to the underlying assets.

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What is ETF?

Source: Chimera S&P UAE

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Why are ETFs are so popular?

Source: Chimera S&P UAE

What is an ETF?

An exchange-traded fund (ETF) is an Investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index.

Benefits of Exchange Traded Funds

Dubai Financial Market Exchange Traded Funds offer many benefits for investors.
  • ETFs traded like stocks, ETFs offer the advantage of being liquid. ETFs can be bought or sold any time during trading hours. They can also be purchased on margin,
  • ETFs have low management fees.
  • ETFs are more accessible to small investors because investor get exposure on all individual shares included in the index of an ETF, while many mutual funds enforce a minimum investment capital.
  • ETFs provide easier access to alternative investments, creating a broader range of investment opportunities. There are ETFs that invest in commodities and foreign exchanges, and offer the ability to invest extensively in foreign and emerging markets.
  • ETFs are Diversified like a fund but trades like a stock. 

How to trade ETFs

You can trade ETFs in DFM through the following steps:

ETF Units trades like Shares.
You have to have a DFM NIN to invest in DFM-listed ETFs.
There is no limit and maximum on the number of units that can be bought.