The ETF landscape in the Middle East and Africa has witnessed a remarkable surge in 2023, with assets invested in Exchange-Traded Funds (ETFs) and Exchange-Traded Products (ETPs) climbing by an impressive 16.7% year-to-date (YTD) as of the end of July. According to a recent report by ETFGI, a leading independent research and consultancy firm specializing in global ETF trends, the region experienced substantial growth, highlighting the growing appeal of these investment vehicles among investors.
Steady Growth and Record Inflows
Assets under management (AUM) in ETFs and ETPs listed in the Middle East and Africa soared from $34.53 billion at the end of 2022 to $40.29 billion by the end of July 2023. This surge in AUM was accompanied by notable net inflows, as the region gathered net inflows of $713 million during the month of July alone. Impressively, the year-to-date net inflows for 2023 reached a staggering $2.86 billion, marking the third-highest on record. The region has experienced an unprecedented sixth consecutive month of net inflows, highlighting the sustained interest and confidence in the ETF market.
Market Performance Insights
Amidst this growth, market performance across different segments has been both diverse and robust. The S&P 500, for instance, rose by 3.21% in July, contributing to its overall 20.65% increase in 2023. Developed markets, excluding the US, observed a similar upward trend, with a 3.62% growth in July and a 15.09% YTD increase. Norway and Israel particularly stood out, with gains of 8.97% and 8.06% respectively in July. Emerging markets posted gains of 6.15% in July and 11.08% YTD in 2023. Turkey and Pakistan notably led the pack among emerging markets, achieving impressive gains of 20.52% and 15.89% respectively in July.
Segmented Inflows and Outflows
The ETF market’s growth trajectory can be further understood by analyzing the segmented inflows and outflows. Equity ETFs garnered substantial net inflows of $779 million in July, contributing to the YTD net inflows of $2.15 billion. This performance, while impressive, was slightly lower than the $2.54 billion net inflows recorded in the same period of 2022. Fixed income ETFs experienced a reversal of fortune, amassing net inflows of $75 million in July, which pushed YTD net inflows to $444 million—surpassing the previous year’s $537 million net outflows. However, commodities ETFs/ETPs reported net outflows of $151 million in July, though the YTD net inflows of $174 million still exceeded the net outflows of $233 million seen in 2022.
Notable Players and Achievements
The industry’s growth can also be attributed to the top 20 ETFs by net new assets, which collectively attracted $973.92 million in July. A standout performer was MTF SAL (4D) S&P 500 (MTFF23 IT), securing the largest individual net inflow of $117.46 million.
In a statement, Deborah Fuhr, the managing partner, founder, and owner of ETFGI, emphasized the ongoing attractiveness of the Middle East and Africa as an investment hub. Her insights underscore the region’s growing influence and potential in the global ETF arena.
Conclusion
The Middle East and Africa have emerged as a dynamic and lucrative destination for ETF investments. With assets soaring by 16.7% year-to-date, and net inflows reaching an impressive $2.86 billion in July 2023, the region’s ETF industry showcases its resilience, diversity, and potential for continued growth. As markets evolve and economies rebound, investors and financial experts alike will keenly observe how this dynamic market continues to shape the global investment landscape.
