Al Rajhi Saudi equity ETF opens today, minimum SAR 10 million

Subscription to units of the Al Rajhi MSCI Saudi Equity ETF on the Saudi Exchange's main market opened Aug. 3 and will run for 30 business days, closing Sept. 14, 2026. The fund manager may extend the initial offering by up to 30 additional business days or close it earlier, the prospectus said.

The minimum launch size is SAR 10 million. If the fund does not raise that amount by the close of the offering period, the manager will refund subscription proceeds to unitholders, including any returns generated from investing those funds, without deductions. That provision protects early subscribers from absorbing the costs of a failed launch.

The ETF is a public, open-ended fund that tracks the MSCI Saudi Arabia Islamic Index, a basket of large-, mid-, and small-cap Shariah-compliant Saudi-listed companies. At least 95% of net asset value will be invested in equities on the Saudi Exchange's Main Market (TASI) and Nomu, the parallel market for smaller companies. The remaining 5% or so can go into investment-grade money market transactions with counterparties regulated by the Saudi Central Bank (SAMA) or into Capital Market Authority-licensed money market funds, including those managed by Al Rajhi, for day-to-day liquidity.

The fund's Shariah Supervisory Committee has approved the structure and the index screening methodology. The MSCI Saudi Arabia Islamic Index excludes companies involved in conventional finance, alcohol, pork, tobacco, or other non-compliant activities, a filter that has broad appeal among Gulf retail and institutional investors.

One creation unit equals 50,000 fund units, or SAR 500,000. That threshold is typical for wholesale ETF subscriptions in the region. Subscribers can invest in cash or in-kind, by contributing eligible securities that match the fund's disclosed portfolio. The minimum cash subscription is also SAR 500,000. Subscribers pay a fee of up to 1% of the total investment amount, though Al Rajhi may waive that fee. After the fund lists on the exchange, individual investors will be able to buy and sell units in smaller lots through a broker.

Total expense ratio is 0.25% of NAV, which is competitive for a passively managed Shariah-compliant Saudi equity product. The fund manager covers any custody, audit, regulatory, or other fees that push costs above that rate. The ETF does not distribute dividends – all income from investments is reinvested, making it suited for total return rather than income seekers.

The fund targets both retail and institutional investors seeking passive exposure to Saudi equities. The MSCI Saudi Arabia Islamic Index has been a benchmark for several other Saudi ETFs, and this offering adds another low-cost vehicle for tracking that universe. Al Rajhi is already active in the Saudi ETF market with products like the Al Rajhi REIT ETF, though that fund follows a different asset class.

The 30-business-day subscription window, combined with the manager's ability to extend it by another 30 days, suggests the fund is designed to gather capital at a deliberate pace rather than through a high-pressure book build. The SAR 10 million minimum launch size is relatively modest for a new ETF, indicating confidence that the target will be met among local institutional allocators and wealth managers who are already comfortable with passive Shariah products.

If all goes to plan, the Al Rajhi MSCI Saudi Equity ETF will be the latest addition to the Saudi Exchange's growing lineup of index-tracking funds, giving investors another way to bet on the kingdom's equity market through a single, liquid, and compliant vehicle.