The National Bank of Abu Dhabi (NBAD) and Abu Dhabi Securities Exchange (ADX) yesterday announced the launch and listing of the first Exchange Traded Fund (ETF) in the GCC region.

The new fund, NBAD One Share Dow Jones UAE 25 ETF, will list on ADX from today, inaugurating the new ETF market in Abu Dhabi.

The new fund will follow the performance of the Dow Jones UAE 25 Total Return Index and provide investors with exposure to 25 blue-chip companies from across the UAE. Meanwhile, listing the ETF at ADX will offer investors the opportunity to buy and sell, as is the case with any other share.

Michael Tomalin, CEO, NBAD, said: "I am proud that NBAD is the first bank to launch an ETF in the region with ADX and Dow Jones. Together, we will have significant firepower to take advantage of the increasing demand for ETFs, which form the fastest growing product area in the investment market."

Rashed Al Baloushi, Deputy CEO, ADX, said the exchange started working on ETFs in 2008. The attempt was to provide investors with a new product, enabling them to diversify investment risks at a relatively low cost.

Michael A Petronella, President, Dow Jones Indexes, said, "The Dow Jones UAE 25 Index is strictly a rules-based index that measures the performance of 25 of the largest, most-frequently traded and liquid equity securities in the UAE. With these index qualities underlying the ETF by the National Bank of Abu Dhabi, local and international investors are offered a transparent and liquid vehicle that provides passive exposure to this market."

The constituents of the new fund will initially have exposure, through the swap, to heavyweights such as Etisalat, First Gulf Bank, Emaar Properties and NBAD among its top holdings. The index itself is subject to strict liquidity criteria as well as to international best practice restrictions on diversification, which limits any stock to a maximum of eight per cent weighting each time the index is recomposed.

Al Baloushi said the new low-risk and low-cost fund will be listed in Abu Dhabi and Dubai and will help foreign investors particularly to enter the UAE market.

Alan Durrant, Chief Investment Officer of NBAD's Asset Management Group, said the fund's country of origin was Ireland, and the evaluating party would be the Bank of Ireland. The least investment is 100,000 shares and there is no closing date. The currency is the UAE dirham, and the supply and demand price will be similar to the net value of daily assets that are issued every 15 seconds.

He said the NBAD has invested $10 million (Dh36.7m) in the fund. An investor can deal through the market maker or Abu Dhabi market directly.