Blackrock iShares USD Sukuk UCITS ETF

BlackRock’s Shariah compliant emerging market Sukuk ETF offering had its secondary listing on the SIX Swiss Exchange on the 30^th April 2024, about three months after its initial Euronext Amsterdam debut on the 18^th January 2024.

The iShares USD Sukuk UCITS ETF (SKUK) is an open-ended investment fund that aims for both capital and income returns by investing based on the JP Morgan EM Aggregate Sukuk Index. It is passively-managed with US dollar-denominated emerging market Sukuk instruments issued by sovereign, quasi-sovereign, corporate and supranational entities. Its Sukuk Fund Panel is comprised of Amanie Advisors Shariah supervisory board members.

Invested securities must have a current face amount outstanding of US$500 million or more and have at least two and a half years until maturity at the time of inclusion, apart from complying with AAOIFI standards.

Being market value-weighted and rebalancing on a monthly basis, this fund aims to achieve a similar return to the underlying reference index. Hence, the fund may invest in other Sukuk similar in performance to constituent securities.

Investors are advised that there is no minimum return guarantee, with an indicative 13.6% loss for an exit within a stress scenario year and moderating to a 10.1% loss for a similar three-year period. On the upside, the indicative gain is 16.4% over a favorable year or 7.1% after three years.

As of the 19^th June 2024, the Ireland-domiciled fund, with assets under management (AuM) of US$39.48 million, has 7.84 million shares issued and contains 129 holdings, with an effective weighted duration of 4.71 years. It is structured as undertakings for the collective investment in transferable securities (UCITS), the European Commission’s regulatory framework of a mutual fund. Its current top five holdings are Saudi Arabia’s KSA Sukuk, Indonesia’s SPV Perusahaan Penerbit SBSN Indonesia III, Turkiye’s Hazine Mustesarligi Varlik Kiralama, Saudi Arabia’s IsDB Trust Services No 2 and the UAE’s DIB Sukuk.

Distributions are conducted twice yearly in May and November.

As a sub-fund of iShares II, an umbrella structure comprising different sub-funds, the SKUK’s assets are ring-fenced from other sub-funds and cannot be used to discharge the liabilities of those other sub-funds. Switching of shares to other sub-funds within iShares II is also not available.

*Disclaimer:  The opinions and viewpoints expressed in the Fund Profile do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.