The Invesco MSCI Saudi Arabia UCITS ETF (MSAU) was the only pure-play Saudi Arabia ETF to capture inflows last week, with both HSBC GAM and BlackRock’s products missing out.
According to data from Ultumus, MSAU was top of the pile for all ETFs listed in Europe, seeing inflows of $404m in the week to 3 May. This 88% increase takes the product’s assets under management (AUM) to $875m.
The inflows highlight the benefits of first mover advantage. The iShares MSCI Saudi Arabia Capped UCITS ETF (IKSA) and the HSBC MSCI Saudi Arabia 20/35 Capped UCITS ETF (HMSP) have under $10m AUM combined, having both launched under three weeks ago, while Invesco launched MSAU last June.
The interest in MSAU comes despite the ETF being the most expensive out of three, charging a management fee of 0.50% and a swap fee of 0.20%. It is the only one to synthetically replicate its index.
HMSP is the cheapest on the European market with an ongoing charges figure (OCF) of 0.50% while IKSA has a total expense ratio (TER) of 0.60%.
The ETFs were launched in response to the MSCI’s decision to include Saudi Arabia across its emerging market indices last June.
The index provider will make the changes in a two-step process beginning this June, making Saudi Arabia the eight-largest country in the flagship index, which tracks around $1.9trn in assets.
It is expected Saudi Arabia’s $536bn stock market could see around $20bn inflows from passive products following its inclusion across major indices.
Investors also wanted to gain exposure to wider emerging market ETFs last week. The Xtrackers MSCI Emerging Markets UCITS ETF (XMME) saw the third highest inflows with purchases of $213m, while the Amundi Index MSCI Emerging Markets ETF (AEME) witnessed inflows of $78m.