Saudi Arabia’s capital market is set for a major development that will help deepen further its ETF market, after the Capital Market Authority approved Al Rajhi Capital’s request to publicly offer units of the Al Rajhi MSCI Saudi Equity ETF on the Saudi Exchange. The ETF will be Shariah-compliant, further expanding the growing universe of Islamic investment funds available to investors worldwide.
The approval allows the fund to be offered as an exchange-traded index fund, giving investors another listed route into Saudi equities through a single product. As usual, the CMA stressed that its approval should not be treated as an endorsement of the fund’s investment merits. It only confirms that the regulatory requirements under the Capital Market Law and its implementing regulations have been met.
Still, the approval adds to a gradual expansion of Saudi Arabia’s ETF ecosystem. For many investors, Saudi equity exposure has traditionally been accessed through individual stocks, active mutual funds, or broader regional mandates. ETFs offer a different route: transparent index exposure, intraday trading, easier diversification, and the ability to express a Saudi market view without choosing single companies.
For Al Rajhi Capital, the move is also strategically relevant. As one of the Kingdom’s major asset managers, with assets under management tripling over the past few years from 60bn SAR to almost 200Bn SAR, launching a Saudi equity ETF announces the bank’s entrance into the passive and rules-based investment space, where global demand has grown rapidly over the past decade. Al Rajhi has significantly strengthened its ETF capabilities over the past few years, recruiting experienced professionals from several leading asset managers, including Albilad Capital.
The new Al Rajhi ETF would also enter a market where competition is slowly forming. Existing Saudi-focused ETFs, including products such as the Albilad MSCI Saudi Equity ETF, already give investors broad exposure to Saudi-listed companies through an exchange-traded structure. More products from large local managers should help improve choice, raise awareness, and potentially support liquidity over time.
Saudi Arabia’s exchange and Tadawul Group have been pushing to broaden product choice, deepen institutional participation, and make Tadawul a more accessible marketplace for both local and international investors. ETFs fit directly into that strategy because they can package market exposure in a simple, listed format.Recently, the exchange introduced its new ETF framework following months of industry consultation, stakeholder engagement, and public feedback. .
Saudi Arabia’s ETF market is still young, but it is becoming more relevant. As more local managers bring index-based products to Tadawul, ETFs could become a bigger part of how investors access the Kingdom’s equity market, Vision 2030 sectors, and long-term capital-market growth story
