Change Traded Funds (ETFs) are now not a distinct segment product reserved for stylish traders. Globally and regionally, ETFs are probably the most highly effective instruments reshaping how people and establishments entry markets, handle prices and diversify portfolios.
In response to Hichem Djouhri, Senior Govt Officer of ASB Capital, the surge in ETF adoption is rooted in a single easy thought: effectivity.
“What ETFs provide is environment friendly entry to a variety of asset lessons, combining price effectivity and execution pace 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 have to 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 suppose that’s a pattern that’s going to reverse,” he added.
What makes in the present day’s ETF panorama much more compelling is how far it has advanced 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 may be very a lot there, and the rollout of recent progressive merchandise continues.”
Demystifying ETFs for traders
Regardless of the fast development of ETFs, misconceptions stay – significantly amongst newer traders. “Typically we overlook 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 ‘Change traded’ – it’s listed on a inventory market and shopping for it’s precisely like shopping for a inventory reminiscent of Microsoft or Apple. And ‘fund’ means a field containing a set of securities that many traders can take part in.”
That construction unlocks flexibility. “With ETFs you should purchase and promote all through the day every time the inventory market is open,” stated Djouhri, contrasting them with conventional funds that always restrict entry and exit.
The rise of thematics and moral investing
Thematic ETFs, spanning AI, renewables, healthcare and commodities – are proving particularly engaging. And within the Center East, one other convergence is gaining momentum.
“There may be robust demand for moral investing, which has lots of commonality with Shari’a-compliant rules, significantly on social and elementary concerns,” stated Djouhri. “Demand for moral merchandise is rising tremendously throughout just about all asset lessons.”
He pointed to improvements reminiscent of inexperienced Sukuk for example of this demand, enabling traders throughout geographies to entry related exposures by means of language and buildings that resonate regionally.
One among ASB Capital’s most up-to-date launches highlights how ETFs are reducing long-standing obstacles. “Traditionally, Sukuk have 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 Change in November 2025, modifications that equation fully. “Our ETF has 200 underlying Sukuk, and traders can purchase 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 in addition as financial savings instruments.
Bridging regional and international markets
On the equities facet, ASB Capital is getting ready to launch a brand new ETF product geared toward simplifying regional publicity. “As a Center East-based investor, it’s not so simple to purchase regional equities instantly,” Djouhri stated. “We’re going to vary 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 traders in numerous geographies and alternatives each regionally and globally,” he stated.
Issues that ETFs amplify market volatility floor frequently, 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 out there, 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 means of the monetary disaster and past and so they’re a really efficient software.”
What to look at for
Non-public market ETFs stand out as a significant development space. “It’s even tougher for the typical 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 incredible resolution, and we’ll proceed to see extra innovation there.”
For traders contemplating ETFs, Djouhri provides three sensible factors. “Look carefully at charges – many ETFs provide related 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 need to think about an alternate.”
As ETFs proceed to evolve, their enchantment within the area is turning into more and more clear, providing broader entry, decrease prices, and smarter methods to speculate confidently throughout borders and asset lessons.
