|
|
|
FAQ
What is an Exchange Traded Fund?
Exchange Traded Fund is a special variation of an investment fund that the
fund portfolio is formed of stocks in an index by their proportions in the
index and fund shares are traded in the stock exchange. Thus it provides the
investors the opportunity to buy and sell the index that the fund represents.
BMD Securities, Inc. Dow Jones DJIM Turkey
Exchange Traded Fund is a Dow Jones Islamic Market Turkey Index based ETF.
Fund shares are traded on Istanbul Stock Exchange. Investors can buy and sell
BMD Securities, Inc. Dow Jones DJIM Turkey ETF as they buy and sell other
stocks.
What is Indicative Net Asset Value?
Net Asset Value of the fund that will be published on the web site shows
portion of the total value of stocks and cash component in each fund share.
Net Asset Value is updated every minute during Istanbul Stock Exchange
session hours and published both by the fund’s web site and data providing
institutions. Thus, investors can observe the difference between fund’s
portfolio value and the price traded in stock exchange. There will be
detailed information for investors about the fund and the index in the fund
web page, http://www.djimtr.com.
Which index is BMD DJIM Turkey
based on?
Another significant value for BMD Securities, Inc. Dow Jones DJIM Turkey ETF is
the value of Dow Jones Islamic Market Turkey Index that the fund follows.
There is a close relationship between the Net Asset Value of the fund and the
index value since stocks and ratios that fund portfolio includes are very
close to those of the index. They move almost parallel to a large extend.
How is the DJIM Turkey
Index composed?
Dow Jones Islamic Market Turkey Index, which is tracked by BMD Securities,
Inc. Dow Jones DJIM Turkey ETF is an index launched by Dow Jones. At present,
it includes stocks that are traded on the Istanbul Stock Exchange. Dow Jones,
as its other indexes, determines the companies that will be in the index by
considering the floating market capital of the companies. Additionally, Dow
Jones takes into account appropriateness of some financial ratios and
operating fields of the companies based on Dow Jones Islamic Market criteria.
The first step is to exclude from the index universe any industry group that
represents an incompatible line of business. According to the criteria, also
excluded are companies whose total debt divided by trailing 12-month average
market capitalization is 33% or more, those whose cash plus interest-bearing
securities divided by trailing 12-month average market capitalization is 33%
or more, and those whose accounts receivables divided by total assets is 45%
or more. Detailed information about the index methodology can be found at http://www.djindexes.com.
What are the advantages of BMD DJIM Turkey?
BMD Securities, Inc. Dow Jones DJIM Turkey ETF has fundamental advantages
compared to regular investment funds. It enables close tracking of index with
low management fee. Furthermore, since changes in index only occur in special
cases such as capital increase by rights issue; considerably fewer portfolio
transactions are required compared to other funds. Thus commission expenses
remain in low levels. Besides, it is much easier to buy and sell the fund.
Investors can buy and sell BMD Securities, Inc. Dow Jones DJIM Turkey ETF
through any bank or brokerage house account exactly as they practice stock
trading. Fund operations can be also carried out by telephone, internet or
ATMs. There is no need for opening another account, additional applications
or agreements.
How is taxing of BMD DJIM Turkey?
Income of the fund portfolio itself is tax-free. Income generated by the
investors through the transactions of ETF shares in the stock market is taxed
same as the other stocks, there is a 10% sales tax on profit calculated according
to FIFO costs. Foreign investors are exempt from the sales tax. There is 10%
withdrawal tax for real persons on dividend revenues. Based on specific
agreements between Turkey
and other countries to prevent double taxing, taxing practices may differ for
particular countries.
What is the advantage of continuously updated price?
ETF has also an important advantage regarding transaction simplicity and
investment risk. When an investor buys fund shares, actually he/she has a
certificate representing stocks in his/her portfolio (this number may change
as the number of stocks in the index changes) by only one operation and thus
disperses the risk compared to investing in only one or few stocks. When the
investor wants to sell the shares, again one operation will be enough. In
addition to following the stock exchange price of the fund, the investors
have the opportunity of continuously observing and comparing Net Asset Value
that is always updated and Dow Jones Islamic Market Turkey Index itself. As
it is known, in other investment funds, the price is determined once a day
and even if market conditions change during the day, it is not reflected to
the fund price immediately. On the other hand, in ETF, investor can react to
the changes in the market right away and can sell or buy the fund with its
up-to-the-minute price.
What does BDM DJIM Turkey
provide for the institutional investors?
ETF is an investment instrument that is also preferred by professional
investors, institutional investors and asset managers in the world market.
This is due to simple and low cost management of country and sector positions
with only a few transactions plus consistency of an ETF related to price
stability and index tracking. ETF enables investors exchanging their fund
shares with stocks in the fund portfolio through ‘Creation’ or ‘Redemption’
process that is a major part of its structure.
What are ‘Creation’ and ‘Redemption’, and how are they carried out?
The exchange of the fund shares with stocks in the fund portfolio is made by
Creation and Redemption transactions. Creation and Redemption for BMD
Securities, Inc. Dow Jones DJIM Turkey
ETF can be carried out with a minimum of 10,000 shares or with its multiples.
The minimum number of shares with the transactions can be completed is called
the ETF Unit. Investors can provide the necessary cash and stocks composition
in their portfolio in return for fund shares in the Creation process. In
Redemption, they give out their fund shares to the fund in return for the
cash and stocks composition corresponding to the fund shares. The composition
of the ETF Unit is announced every morning before stock market session
starts.
How do exchange transactions contribute in price stability?
Similarly, with a minimum of 10,000 shares, an investor who has bought fund
shares in the stock market can get corresponding amount of stocks and cash
from the fund by giving fund shares directly to the fund through the
Redemption process, or the investor can sell fund shares that he/she obtained
by Creation via the stock exchange at the price quoted in the market. This
opportunity of making bilateral transactions enables the difference between
stock exchange price of the fund and its portfolio value to remain at the
least possible level. If price difference increases an arbitrage opportunity
will occur, transactions in the stock exchange will lead stock exchange price
to get close to the Net Asset Value again.
How are dividends utilized in BMD DJIM Turkey?
Dividends delivered by stocks in the BMD Securities, Inc. Dow Jones DJIM
Turkey ETF portfolio will not be reinvested and held in the portfolio, they
will be transferred to the investors proportionally to their fund shares
after expenses, legal payments and fees are deducted. Thus investors can
differentiate their dividends delivered by stocks in the fund portfolio and
the fund earnings. They can also immediately get their dividends without
waiting sale of their fund shares.
|
|
