Closed-Ended Investment Traded Funds – CEFs
What are Closed-ended Investment Traded Funds (CEFs)?
CEFs are investment funds available to the public and its units are traded on the market during trading hours similar to Real Estate Investment Traded Funds “REITs”. It aims to facilitate investments in different sectors and fields. Also, CEFs units represents ownership of the fund's assets. CEFs like other securities in the market, are subject to supervision by the Capital Market Authority and Tadawul, each according to their duties. Capital market regulations also oblige CEFs to have high levels of transparency and disclosure by publishing periodic reports for the fund on the website of the Saudi Stock Exchange (Tadawul).
Characteristics of Closed-ended Investment Traded Funds (CEFs):
An investment opportunity: providing more liquidity to investors by buying and selling fund units during trading hours
Ease of investment: CEFs are distinguished by clarity of their regulations and ease of trading their units - buying and selling - similar to shares and real estate investment traded funds listed on the Saudi Stock Exchange.
Transparency requirements: The fund manager is obligated to submit periodic reports according to the activity of each fund, and they are displayed on Tadawul website like other reports of companies listed on the Saudi Stock Exchange.
Assets Diversification: CEFs are characterized by the diversity of investment fields in one fund. Closed-ended traded investment are an asset or a group of investment assets in one fund, and they differ from Real Estate Investment Traded Funds (REITs) in the way of dividend distribution and ownership of assets and investments, as closed-ended traded funds are not allowed to invest in real estate investments.
Offering and listing criteria
|Number of Unitholders||At least 200 unitholders|
|Public Ownership||At least 30%|
|Type of Investors||All types of investors|
|Minimum Market Cap||300 million SAR|
|Leverage||The fund's borrowing may not exceed 30% of its net asset value|
|Legal Structure||Closed ended fund|
|Nominal Value||10 SAR per unit|
What are the investment scopes and limitations of CEFs in the Main Market?
|Investment Scopes||There are many asset classes available for the fund manager to invest in, for example, but not limited to:
A table for comparing CEFs, REITs, ETFs, and equity in the Main Market?
|Characteristics||Closed-ended Investment Traded Funds -CEF||Real Estate Investment Traded Funds - REIT||Exchange Traded Funds - ETF||Equity – Main Market|
|The Legal Structure||Closed ended fund||Closed ended fund||Open ended fund||Public company|
|Minimum Market Cap||A minimum of 300 million riyals||A minimum of 500 million riyals||A minimum of 10 million riyals||A minimum of 300 million riyals|
|The Nominal Value||10 riyals per unit||10 riyals per unit||N\A||10 riyals per share|
|Number of Investors||At least 200 unitholders||At least 200 unitholders||N\A||At least 200 shareholders|
|Profit Distribution||There is no requirement to distribute profits||At least 90% of the fund’s net profits must be distributed annually to the unit holders||There is no requirement to distribute profits||There is no requirement to distribute profits|
|Leverage||The fund's borrowing may not exceed 30% of its net asset value||The fund's borrowing may not exceed 50% of its net asset value||The fund's borrowing may not exceed 10% of its net asset value||N\A|
|Public Ownership||At least 30%||At least 30%||N\A||At least 30%|
|Trading Hours||Trading in the market during official trading hours||Trading in the market during official trading hours||Trading in the market during official trading hours||Trading in the market during official trading hours|