Alternate Traded Funds (ETFs) are now not a distinct segment product reserved for classy buyers. Globally and regionally, ETFs are one of the vital highly effective instruments reshaping how people and establishments entry markets, handle prices and diversify portfolios.
In line with Hichem Djouhri, Senior Government Officer of ASB Capital, the surge in ETF adoption is rooted in a single easy concept: effectivity.
“What ETFs provide is environment friendly entry to a variety of asset lessons, combining value effectivity and execution velocity to permit folks to precise their funding views on any underlying asset class,” he stated in an interview with Arabian Enterprise.
From energetic to passive
Globally, ETFs have gained momentum amid the long-standing debate round energetic versus passive investing. “Are you able to beat the market? That’s a query folks ask on a regular basis,” stated Djouhri. “ETFs say you don’t must beat the market – you simply get the market efficiency with out having to pay extreme charges.”
This scale of this shift has been important. “There’s now extra capital in ETFs than there may be in actively managed funds, and I don’t assume that’s a pattern that’s going to reverse,” he added.
What makes immediately’s ETF panorama much more compelling is how far it has developed from its early, purely passive roots. “You now have semi-active ETFs, good beta ETFs, and even ETFs on non-public markets – which was unheard of some years in the past,” Djouhri stated. “The demand could be very a lot there, and the rollout of latest revolutionary merchandise continues.”
Demystifying ETFs for buyers
Regardless of the speedy progress of ETFs, misconceptions stay – significantly amongst newer buyers. “Typically we neglect to ask the very primary query: what’s an ETF?” Djouhri stated.
At its core, he defined, an ETF is an trade traded fund. “The important thing phrase is ‘Alternate traded’ – it’s listed on a inventory market and shopping for it’s precisely like shopping for a inventory resembling Microsoft or Apple. And ‘fund’ means a field containing a group of securities that many buyers can take part in.”
That construction unlocks flexibility. “With ETFs you should purchase and promote all through the day at any time when the inventory market is open,” stated Djouhri, contrasting them with conventional funds that usually restrict entry and exit.
The rise of thematics and moral investing
Thematic ETFs, spanning AI, renewables, healthcare and commodities – are proving particularly enticing. And within the Center East, one other convergence is gaining momentum.
“There’s sturdy demand for moral investing, which has quite a lot of commonality with Shari’a-compliant rules, significantly on social and basic issues,” stated Djouhri. “Demand for moral merchandise is rising tremendously throughout just about all asset lessons.”
He pointed to improvements resembling inexperienced Sukuk for example of this demand, enabling buyers throughout geographies to entry comparable exposures by way of language and constructions that resonate regionally.
One in all ASB Capital’s most up-to-date launches highlights how ETFs are decreasing long-standing obstacles. “Traditionally, Sukuk had been reserved for establishments or high-net-worth people as a result of shopping for a single Sukuk required a minimal of USD 200,000,” Djouhri stated.
ASB Capital’s sukuk ETF, XASB, listed on the London Inventory Alternate in November 2025, adjustments that equation utterly. “Our ETF has 200 underlying Sukuk, and buyers should buy it for round USD 27. You get all of the financial advantages and publicity with out the door being closed due to minimums.”
That accessibility, he added, makes ETFs appropriate not simply as funding automobiles but additionally as financial savings instruments.
Bridging regional and world markets
On the equities aspect, ASB Capital is getting ready to launch a brand new ETF product aimed toward simplifying regional publicity. “As a Center East-based investor, it’s not so easy to purchase regional equities immediately,” Djouhri stated. “We’re going to alter that with our subsequent launch, coming very quickly.”
This philosophy displays the agency’s broader mission. “ASB Capital was constructed to make investments smarter, less complicated and extra accessible, to be a bridge between buyers in numerous geographies and alternatives each regionally and globally,” he stated.
Considerations that ETFs amplify market volatility floor recurrently, however Djouhri is unconvinced by this argument. “ETFs don’t inherently create extra volatility. They’re meant to provide the efficiency of the market – if there’s volatility available in the market, you’ll see it within the ETF.”
Other than remoted instances, he famous, ETFs have weathered a number of market cycles. “They’ve been round by way of the monetary disaster and past they usually’re a really efficient instrument.”
What to observe for
Non-public market ETFs stand out as a serious progress space. “It’s even tougher for the common investor to enter non-public markets than public ones the place minimums are very excessive, lock-ins might be seven to 10 years, and liquidity is proscribed,” stated Djouhri. “ETFs are an ideal answer, and we’ll proceed to see extra innovation there.”
For buyers contemplating ETFs, Djouhri provides three sensible factors. “Look intently at charges – many ETFs provide comparable publicity however are priced in a different way,” he stated. “Additionally take a look at liquidity as one other key issue, and at last, evaluate the ETF’s efficiency to what it’s meant to duplicate. It needs to be very shut – if it’s not, you could wish to take into account another.”
As ETFs proceed to evolve, their attraction within the area is changing into more and more clear, providing broader entry, decrease prices, and smarter methods to speculate confidently throughout borders and asset lessons.
