With its initial subscription period open from the 24th June 2024 to the 2nd July 2024, Lunate Capital’s Chimera JP Morgan Global Sukuk ETF aims to track the performance of liquid, US dollar-denominated Sukuk across emerging markets.
Each exchange-traded fund (ETF) unit is initially priced at AED3.67 (US$1) for investors seeking performance tracking of the JP Morgan Global IG Sukuk Index – which includes investment grade sovereign, quasi-sovereign and corporate Sukuk instruments with at least US$500 million in face amount outstanding.
Lunate Capital Public Markets Head Sherif Salem told IFN Investor this open-ended fund “includes Malaysia and Indonesia, which currently account for about 30% of the index and 70% is in the GCC region”.
“Around 55% are corporate-issued, 20-25% are government-backed and the rest are quasi-government Sukuk.”
For inclusion in this fund, the Sukuk must be rated by S&P, Moody’s or Fitch as being ‘BBB-’ equivalent or higher. Only Sukuk with at least 2.5 years until maturity are included and at each month-end, Sukuk that has less than 12 months validity will be removed.
Apart from having to meet AAOIFI Shariah standards, Sherif said further compliance is determined by Dar Al Sharia – using guidelines issued by the Higher Sharia Authority at the Central Bank of the UAE.
Applying a passive investment stance, Sherif said the fund will use the sampling method by investing in only 20-30 constituent Sukuk out of 76 currently listed in the JP Morgan Global IG Sukuk Index. “Our objective is to match the yield based on the index.”
Being the second income fund launched by Lunate Capital, this latest ETF is the first to offer distribution on a quarterly basis, rather than semi-annually.
Subscription to this ETF is via six authorized brokers or directly through the Abu Dhabi Securities Exchange (ADX) ahead of the fund’s ADX listing on the 8th July 2024.
Asked about its prospects, Sherif said the fund’s listing will proceed as long as subscriptions exceed AED1 million (US$272,200).
*Disclaimer: The opinions and viewpoints expressed in the Fund Profile do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.
| Chimera JP Morgan Global Sukuk Exchange Trade Fund (ETF) | |
| Fund Manager | Lunate Capital |
| Launch date | 24th June 2024 |
| Asset class | Sukuk |
| Base currency | US dollar |
| Benchmark index | JP Morgan Global IG Sukuk Index |
| Investment objective | A passively-managed fund aiming to track the performance of liquid, US dollar-denominated Sukuk instruments across emerging markets. Distributions quarterly. |
| Listing | Abu Dhabi Securities Exchange (8th July 2024) |
