On 20 April 2026, State Street Investment Management listed the State Street Saudi Arabia Enhanced Active Equity UCITS ETF (Acc) on the London Stock Exchange, an actively managed fund offering European investors access to the Saudi Arabian equity market with the explicit aim of outperforming the benchmark.
Article created by the editorial staff of ETFWorld.co.uk
Anna Paglia, Chief Business Officer at State Street Investment Management
The new fund aims to outperform the Saudi Arabian stock market using a proprietary quantitative model. TER: 0.75%, benchmark: S&P Saudi Arabia BMI 5/10/40 Capped Index.
The ISIN code is IE0002LI4M98, and the Total Expense Ratio is 0.75%.
The fund and its structure
The fund is domiciled in Ireland and is authorised by the Central Bank of Ireland under UCITS regulations. The listed share class is accumulation (Acc), which means that income is reinvested rather than distributed to shareholders.
The benchmark is the S&P Saudi Arabia BMI 5/10/40 Capped Index (ticker: SPBSACUN), an index that reflects the performance of the Saudi stock market as a whole, weighted by market capitalisation with concentration limits on individual holdings. Although the fund uses this index as a benchmark, it does not aim to replicate it: the portfolio holdings and their relative weights may differ significantly from the index itself.
The stated objective is to generate a return higher than that of the Saudi stock market over the medium to long term.
The investment strategy
The manager uses a proprietary quantitative model for stock selection, which integrates multiple factors: quality, value, market sentiment and catalysts. The model also incorporates sectoral, geographical and macroeconomic variables.
Portfolio construction aims to balance expected return and risk, with defined limits on exposures by country, sector and individual security — both in absolute terms and relative to the index. The fund may also invest in securities not included in the index, provided they originate from countries represented in the benchmark. The use of derivatives is also permitted for efficient portfolio management.
The fund falls into the actively managed ETF category, a segment that has almost tripled in size in Europe over the past two years, capturing a significant share of the continental market. State Street has accelerated its presence in this segment with a series of launches in recent months, combining in-house strategies with external partnerships as part of its ‘ETF-as-a-service’ offering.
The context: Saudi Arabia and Vision 2030
The launch of this ETF comes at a time of structural transformation in the Saudi capital market. The market capitalisation of the Tadawul All Share Index reached $2.7 trillion by the end of 2024, representing 463% growth over ten years, according to an analysis by S&P Global.
The Capital Market Authority opened the Saudi stock market, Tadawul, to all categories of foreign investors in February 2026, a milestone that has brought international holdings to over 590 billion Saudi riyals (approximately $157 billion). This is the most significant reform of the Kingdom’s capital markets in recent decades.
Tadawul remains the largest stock market in the Middle East. According to S&P Global, the market remains dominated by large issuers linked to the government, with relatively low trading volumes and foreign ownership, though these are gradually increasing.
On the macroeconomic front, Saudi Arabia’s GDP is expected to grow by between 4% and 4.6% in 2026, supported by infrastructure investment and Vision 2030 projects. The TASI index has been hovering around 10,965 in recent sessions.
The strategic context: the agreement with the NDF
The launch of this equity ETF is a direct continuation of the strategy announced by State Street Investment Management in Saudi Arabia at the end of 2025. The National Development Fund (NDF) signed a memorandum of understanding with State Street Global Advisors (SSGA) and State Street Saudi Arabia Financial Solutions (SSSAFS) during the US-Saudi Arabia Investment Forum, worth up to 750 million Saudi riyals. The agreement covers collaboration on the development of innovative investment products in the Saudi equity market, to enhance the attractiveness of the domestic financial market.
Salah AlBassam, Senior Executive Director of Investment Management at the National Development Fund, stated that the collaboration aims to introduce innovative investment products to improve access to Saudi markets, attract global capital and generate a sustainable impact in line with Vision 2030.
State Street established its regional headquarters for the MENA region in Riyadh in 2025, further confirming the firm’s commitment to the Saudi market.
Risk Profile
As with any exposure to emerging markets, the fund involves specific risks that investors should consider carefully.
Emerging market risk. Investments in emerging or developing markets may be more volatile and less liquid than developed markets. Such markets expose investors to generally less mature and diversified economic structures, as well as political systems with less stability.
Active management risk. As this is an actively managed fund, the manager does not aim to replicate the benchmark index. The management team’s assessments of specific securities, sectors or investment strategies may prove to be incorrect, resulting in losses for the fund. There is no guarantee that the quantitative model will produce the expected results.
Currency risk. Investment in securities denominated in foreign currencies entails the risk of capital loss arising from adverse exchange rate movements and any withholding taxes.
Liquidity risk. The fund is listed on the stock exchange and its market value may differ from its NAV (Net Asset Value). Brokerage costs and fund expenses affect the net return to the investor.
Geopolitical risk. As highlighted by recent episodes of volatility — the TASI fell by as much as 5% following regional geopolitical tensions between the United States, Israel and Iran, hitting its lowest levels since March 2023 — the Saudi market remains sensitive to geopolitical risks in the Middle East.
Final considerations
The launch of this ETF responds to growing demand from European institutional and qualified investors seeking exposure to Saudi Arabia through a regulated, tax-efficient instrument listed on a major stock exchange. The 0.75% TER reflects the additional cost of active management compared to passive Saudi Arabia ETFs already on the market.
The decision to adopt a multi-factor quantitative model — incorporating quality, value and sentiment — is consistent with the approach already used by State Street in other active equity funds within the same range, such as the World Small Cap Enhanced Active Equity UCITS ETF. It remains to be seen whether the strategy will be able to justify the cost premium over passive alternatives in the long term, in a market that remains relatively concentrated and less liquid than the major developed stock exchanges.
| ETF | State Street Saudi Arabia Enhanced Active Equity UCITS ETF (Acc) |
| ISIN | IE0002LI4M98 |
| SEDOL | BSZC1K3 |
| Currency | USD |
| Management Fee | 0.75% |
| Dividends | Accumulation |
Source: ETFWorld.co.uk
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