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The Exchange Traded Funds market within the Investment Funds market in the United Arab Emirates is witnessing substantial growth, fueled by increased investor interest, diversification benefits, and the rising popularity of cost-effective investment solutions.

Customer preferences: Investors in the United Arab Emirates are increasingly gravitating towards Exchange Traded Funds (ETFs) as they seek enhanced portfolio diversification and lower fees. This shift is influenced by a growing awareness of financial literacy among younger demographics, who prioritize accessible investment options. Additionally, the rise of digital platforms has made it easier for tech-savvy millennials and Gen Z investors to engage with the market, aligning their investment choices with sustainable and ethical practices that reflect their values and lifestyle aspirations.

Trends in the market: In the United Arab Emirates, the Exchange Traded Funds (ETFs) market is experiencing a notable shift toward thematic investing, with a focus on sectors like technology, renewable energy, and healthcare. Investors are increasingly drawn to ETFs that align with their personal values, reflecting a desire for socially responsible investment options. Furthermore, the integration of artificial intelligence in trading strategies is enhancing decision-making processes. As a result, asset managers are adapting their offerings to cater to this demand, which could lead to increased competition and innovation within the investment funds landscape.

Local special circumstances: In the United Arab Emirates, the Exchange Traded Funds (ETFs) market is uniquely influenced by its diverse expatriate population and a strong emphasis on innovation. The cultural blend fosters a demand for investment products that resonate with global trends, while local regulations encourage the establishment of Sharia-compliant ETFs, attracting a broader investor base. Additionally, the UAE's strategic location as a financial hub facilitates access to international markets, allowing investors to diversify their portfolios effectively, thus shaping the dynamics of the investment funds landscape.

Underlying macroeconomic factors: The Exchange Traded Funds (ETFs) market in the United Arab Emirates is significantly shaped by macroeconomic factors such as oil price fluctuations, economic diversification efforts, and demographic trends. The UAE's reliance on oil revenues means that global oil price changes directly impact national economic health, influencing investor sentiment and market liquidity. Furthermore, ongoing diversification initiatives aim to reduce dependence on oil, fostering growth in non-oil sectors and enhancing the attractiveness of ETFs. Additionally, favorable fiscal policies and regulatory frameworks promote innovation and financial inclusion, encouraging investment in ETFs among both local and expatriate populations, thereby enriching the investment funds landscape.

Data coverage:

The data encompasses B2C enterprises. Figures are based on financial values/ transaction values/ turnover ratios/ number of funds data within the investment funds market.

Modeling approach / Market size:

Market sizes are determined by both a bottom-up and top-down approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data from European central banks, World Bank, national central bank statistics, and international organizations, such as OECD, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, namely gross domestic product (GDP), consumer price index(CPI), lending interest rate, central bank interest rate, employment rate, secured overnight financing rate (SOFR), and tax rates. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In the market, we use the HOLT-damped Trend and ARIMA methods to forecast future development. The main drivers are GDP per capita, consumer price index (CPI), and central bank interest rate.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.