3 Middle East ETFs To Avoid If Qatar Boils Over 2


Middle East ETFs are under pressure

Saudi Arabia (KSA), Bahrain, UAE (UAE) , Egypt (EGPT), Yemen, and Maldives recently cut their diplomatic ties with Qatar on accusations of the country backing terrorist outfits. This conflict has caused major tensions in the Middle East region and ETFs investing in these countries have subsequently come under fire.

The following ETFs provide exposure to Qatar’s equities:

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  • Wisdom Tree Middle East Dividend Fund (GULF)
  • SPDR S&P Middle East and Africa ETF (GAF)
  • iShares MSCI Qatar ETF (QAT)

The iShares MSCI Qatar Capped ETF is a pure-play bet on Qatari equities. It invests in a basket of 28 stocks and is heavily tilted towards the financial sector. The financial sector forms 54% of its portfolio with industrials and real estate comprising 15% and 12% of its holdings. This fund has a significant concentration risk with Qatar National Bank (QNBK) forming one-fifth of its portfolio. YTD this ETF is down 11% and lost 9% on June 6th alone.

The Wisdom Tree Middle East Dividend Fund invests in a basket of dividend paying companies in the Middle East. This fund invests primarily in the financial sector and provides diversified exposure to oil producing Middle East nations including Kuwait, United Arab Emirates, Qatar, and Morocco among others. Qatar’s stocks comprise 22% of this ETF’s portfolio. Industries Qatar (4.36%) and Qatar National Bank SAQ (3.79%) are included in the top 10 holdings of the fund. Year to date, shares of the GULF ETF have returned 0.5%.

The SPDR S&P Emerging Middle East & Africa ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Mid-East and Africa BMI Index. Qatar forms 8.9% of this ETF’s portfolio. YTD this ETF has returned 12.5%.

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