Fund flows
Investors seeking exposure to Middle-East nations are increasingly investing in ETFs that provide exposure to these geographies and/or companies with operations in the region.
So far during the year 2017, investors have added $26.5 million to the iShares MSCI Frontier 100 ETF (FM), but have withdrawn $1.8 million from the Wisdom Tree Middle East Dividend Fund (GULF). Meanwhile, outflows to the SPDR S&P Emerging Middle East and Africa ETF (GAF) are at $3.2 million YTD.
In 2016, investors pulled out $4.8 billion from the GAF ETF as oil prices fell. Meanwhile, the FM ETF attracted $47.4 million in investments while investors pulled out $6.7 million from the GULF ETF in 2016.
Change in institutional investors holdings
Negative flows to the GULF ETF correspond with the decline in trade activity of investors as seen by the 13F filings of major institutional asset managers for 4Q16.
In 4Q16, trade activity by 13F filers displays a 36% increase in aggregate shares of the GAF ETF held by institutional investors and hedge funds. However, for the GULF ETF, aggregate shares held by investors declined 18%. During the fourth quarter, 4 funds closed their positions in the GULF ETF while just 1 fund took fresh positions.
Comparatively, trade activity in the FM ETF edged up by 13% in the fourth quarter as investors expect frontier markets to outperform.
