The recent launch of the first exchange traded funds (ETFs) in the UAE will open up a broad investment horizon to retail as well as institutional investors from the region and abroad, said a top official of BlackRock, a global asset management and investment management firm.

Deborah Fuhr, Managing Director and global Head of ETF research and implementation strategy, BlackRock, London, said: "ETFs are a very useful tool to implement exposure to a diversified asset class like equity, fixed income and commodities very quickly and anytime during the day.

"In the UAE, for instance, the ETF will give investors an easy way to get exposure to securities that are listed on both the Abu Dhabi Securities Exchange and Dubai Financial Market in a single product."

Asked what value will ETF bring to the UAE's capital market, especially in the current volatile conditions, she said the ETF would bring the benefit of getting a diversified exposure.

"When an investor picks one stock he is exposed to the stock-specific risk. But by going through the ETF, the investor is not making bet on one stock but is buying a diversified basket," she said.

Fuhr said another advantage with ETFs is that unlike index funds, ETFs are listed on exchange, can be bought and sold by brokers, and the buy-sell transaction can be done anytime during the intraday trade.

According to a research by BlackRock, of the total investors in ETFs from the GCC region, only 30 per cent are institutional investors [such as fund managers, sovereign wealth funds, insurance companies and corporates), while retail investors such as private banks, high net worth individuals, advisors and family offices comprise as much as 70 per cent.

The 30:70 ratio between institutional and retail investors in the Gulf is in contrast to the global figure wherein the share of institutional investors is high. A breakdown of US-based ETF investors shows, for example, that 45 per cent of investors are institutional while retail investors comprise 55 per cent in the total ETF assets under management.