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- 1. How to invest in Tadawul All-Share index funds in 2023
- 2. Where can I invest in the Tadawul All-Share index?
- 3. How do I invest in the TASI index?
- 4. The different ways to invest in the TASI
- 5. How much does it cost to invest in the Tadawul All-Share index?
- 6. Should I invest in the Tadawul All-Share index?
- 7. FAQs
How to invest in Tadawul All-Share index funds in 2023
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77% of retail CFD accounts lose money.
It only takes a few minutes to invest in the Tadawul All-Share index. One of the simplest and most popular ways to invest is to buy shares in a Vanguard Tadawul All-Share ETF through an online trading platform.
Where can I invest in the Tadawul All-Share index?
According to our expert research, eToro is the best ETF broker to invest in Tadawul All-Share index funds.
Both Tadawul All-Share ETFs and Tadawul All-Share CFDs are available to invest in through eToro .
Here are three more places to buy the Tadawul All-Share, ranked according to their cost, security, and features.
77% of retail CFD accounts lose money.
How do I invest in the TASI index?
The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an Tadawul All-Share ETF or CFD. This guide explains how to do it:
Step 1. Sign up to eToro
We recommend using eToro to invest in Tadawul All-Share. Sign up for a brokerage account and deposit some money. You may need to supply a form of photo ID to verify the account.
77% of retail CFD accounts lose money.
Step 2. Decide how to buy Tadawul All-Share
This boils down to choosing between a Tadawul All-Share ETF or CFD. ETFs are generally better suited to investors who want to passively track the Tadawul All-Share’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.
Step 3. Invest in the Tadawul All-Share
Sign into your trading account and search for the Tadawul All-Share. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.
Step 4. Monitor your investment
When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.
Your trading account will show the price change in the Tadawul All-Share since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the Tadawul All-Share and close your position, ideally at a profit!
The different ways to invest in the TASI
As we mentioned above, there are numerous ways to put your money into the Tadawul All-Share. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.
Tadawul All-Share ETFs
An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.
An Tadawul All-Share ETF is one way of investing in the Tadawul All-Share. It’s simply an investment fund that mirrors the performance of the Tadawul All-Share. When you buy shares in the fund, the value of your investment will rise or fall with the Tadawul All-Share itself.
ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the Tadawul All-Share index, because you can buy or sell shares in the fund throughout the day.
Examples of popular TASI ETFs
- iShares MSCI Saudi Arabia ETF (KSA)
- Franklin FTSE Saudi Arabia ETF (FLSA)
- Alawwal Invest MSCI Tadawul 30 Saudi ETF
Tadawul All-Share index funds
An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the Tadawul All-Share. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.
However, there are a couple of differences. Tadawul All-Share index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in Tadawul All-Share index funds.
That means an Tadawul All-Share mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.
Examples of popular TASI index funds/mutual funds
- Morgan Stanley Saudi Equity Fund
Tadawul All-Share CFDs
CFDs (contracts for difference) are a way to speculate on Tadawul All-Share price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the Tadawul All-Share – but it’s separate from it.
As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.
All of this means Tadawul All-Share CFDs offer the potential to outperform a fund that passively tracks the Tadawul All-Share’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.
Tadawul All-Share futures
Futures contracts are agreements to buy or sell the TASI at an agreed price on a set date in the future. Tadawul All-Share futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.
Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.
Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the Tadawul All-Share then you might want to short the Tadawul All-Share so that you still make some money if the price falls.
Tadawul All-Share stocks
Another way to invest in the Tadawul All-Share is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the Tadawul All-Share in order to get broad exposure to its performance.
The most heavily weighted stocks in the Tadawul All-Share tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.
One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.
For the Tadawul All-Share index, the largest stocks you might choose to invest in are:
|Al Rajhi Bank|
|Saudi National Bank|
|Sabic Agri-Nutrients Co.|
|Saudi British Bank|
|Arab National Bank|
|Americana Restaurants International PLC|
|Sahara International Petrochemical Co.|
|National Medical Care Co.|
The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.
How much does it cost to invest in the Tadawul All-Share index?
From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.
|Instrument||Trading fee||Management fee|
|Exchange traded funds||$0-$5.99||0-0.2%|
|Index fund / mutual fund||$0-$5.99||0.1-2%|
*A fee comparison of 3 leading brokers for example purposes
ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.
All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars.
Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.
Should I invest in the Tadawul All-Share index?
Yes, Tadawul All-Share investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.
The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The Tadawul All-Share is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.
What are the advantages of investing in the Tadawul All Share index?
An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the Tadawul All Share index:
- Own a piece of the largest Saudi stocks. The Tadawul All Share tracks the performance of the biggest companies in Saudi Arabia. When you invest in it, you own a piece of all of those stocks.
- Invest in a rapidly growing Saudi economy. The Saudi Arabian economy is growing fast, and the country is having more of an impact on the world stage. Investing in the Tadawul All Share is a way to grab a piece of that growth.
- Easy to invest as a beginner with little money. You can start investing with just a few pounds if you buy shares in a Tadawul ETF. This is a lot cheaper than buying shares in lots of individual companies.
- Diversified portfolio of stocks from different industries. The Tadawul All Share includes companies that operate in lots of different industries and sectors. That means that your portfolio is balanced, each stock price reacts differently to the economic situation, so there isn’t as much risk of your portfolio losing value all at once.
- Invest in lots of finance and energy stocks. Banks and oil companies dominate the Tadawul index. Investing in the index as a whole means you can invest in these industries without having to try to pick the best performing stock.
What are the disadvantages of investing in the Tadawul All Share index?
The main risk of investing in the Tadawul All Share is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of Tadawul All Share investing.
- All stocks are linked to the performance of the Saudi economy. If the economy were to suffer a recession, it’s likely all stocks would be affected in some way. So you don’t benefit from diversity in a geographical sense.
- Commodity prices can have a big impact on the index’s performance. It can be difficult to predict how oil prices might fluctuate, but they have a large role in the performance of the Saudi economy.
- The index is heavily weighted towards one or two industries. As finance and energy are so important, it means you don’t get all the benefits of diversity. Any issue that affects banks or energy stocks would be likely to drag on the overall index performance.
An ETF is a better option if you want to be able to buy and sell shares in the Tadawul All-Share throughout the day. An index fund is better suited to long term investors with a larger initial sum to invest.
An ETF is the best way for a beginner to invest in the Tadawul All-Share index. It’s easy to buy shares in an ETF and the costs are relatively low. You only have to pay the trading fees and a small annual management fee.
Yes, if you choose the right online broker. Not all brokers offer index investing, so make sure to find a broker that offers the Tadawul All-Share index before you sign up.
The Tadawul All-Share itself does not pay dividends, but many companies listed on it do. If you invest in a Tadawul All-Share index fund or ETF then you will receive a percentage of the dividends paid out by those companies, based on the number of shares you own in the fund.
The iShares MSCI Saudi Arabia ETF is the best way to invest in the Tadawul All-Share index. It’s the largest and most popular fund, containing stocks in the largest companies in Saudi Arabia.
More indices to invest in
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