Markaz: ETFs - Perfect investment avenues for volatile markets

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Markaz: ETFs - Perfect investment avenues for volatile markets 15 - Oct - 2006

Markaz announced Markaz: ETFs - Perfect investment avenues for volatile markets Kuwait City, 15 October 2006, Kuwait Financial Centre “Markaz”, one of the Middle East’s leading investment banking and asset management companies, announced that the equity markets worldwide have been very volatile this year – surging initially and then tumbling around May-June on fears over inflation, and thereafter recovering most of the losses. Volatility levels increased significantly as the markets fell sharply in May after a strong run in the previous months. According to Mr. Barrak Al Usaimi, Investment Manager- Investment Advisory Services at Markaz, “ETFs being open-ended investment funds that replicate an index, have lower risk compared to stock-specific investments, trade continuously on an exchange, and provide ample diversification. ETFs offer all the benefits of index investments but with far more flexibility.” In a nutshell, an ETF is a cross between a stock and a mutual fund. Like a stock it can be traded on a stock exchange, and like a mutual fund it can be treated as a diversified portfolio. There are distinct advantages of ETFs over a normal trading portfolio, which have lead to their soaring popularity. Since they are passively managed, they have very low operating and transaction costs. Moreover, ETFs have very low distribution rates, usually even lower than index funds. Furthermore, ETFs can be bought or sold anytime during the market hours. Unlike mutual funds, ETFs offer the additional flexibility of margin buying and short selling. As it may be seen, it is difficult for single managers to outperform the index sometimes due to the lop sided performance of certain underlying sectors of the index such as the Telecom, Utilities, and Consumer Staples that had a remarkable year which boosted the S&P 500 during 3rd quarter. Along with what is happening in the markets, witnessing the volatility in equity markets worldwide, the answer to these uncertain circumstances is to have exposure to the Atlas ETFs Program offered by Markaz. As per Mr. Al Usaimi “Atlas ETFs Program allows the obtaining of exposure to different sectors of the market instead of focusing on an individual area. This means the investor can invest in a highly diversified, cost-effective, and risk-controlled segment.” With Atlas ETFs Program's (Markaz Global ETF Program) performance month to date being 1.52% and year to date being 6.71%, making it the ideal vehicle for modern investment strategies. Using Tactical Asset Allocation which is shifting between different asset classes as a reflection of economic events or in anticipation of a changing market, Atlas ETFs Program has been devised such that it combines the stability provided by the developed Western markets with the higher return opportunities, albeit at a higher risk, available in the Emerging Markets. Further, within the selected markets, in some cases, sector ETFs have been chosen rather than the broad market Index ETFs to out perform the index. Kuwait Financial Centre 'Markaz', with total assets under management of over $4.35 billion as of June 30, 2006, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd. -Ends- Photo Caption: Mr. Gopal Menon, SVP– International Investments/ Investment Advisory Services