Address
Riyadh, Saudi Arabia
Which Investment Funds Trade on Tadawul?
Three types of funds trade on the Saudi Exchange: real estate investment traded funds (REITs), exchange-traded funds (ETFs) and closed-ended traded funds. You buy and sell them from your stock portfolio like any share during market hours.
In September 2026, about 20 REITs, 14 ETFs and 3 closed-ended funds were listed on the Saudi Exchange. Most of the well-known public funds (the equity and murabaha funds offered by banks) do not trade on the exchange; you subscribe to and redeem them through the fund manager directly.
Traded vs. Non-Traded Funds: What’s the Difference?
The main difference is how you buy and the price you pay:
| Traded fund (ETF or REIT) | Non-traded public fund | |
|---|---|---|
| Where you buy | Stock portfolio on the exchange | Fund manager (bank or investment firm app) |
| Price | Market price at the moment of execution | Net asset value on the valuation day |
| Timing | Any time during trading hours | On set valuation days |
| Cost to get in and out | Trading commission | Subscription or redemption fees, if any |
| Liquidity | Depends on buyers and sellers in the market | Redemption guaranteed under the fund’s terms |
The advantage of a traded fund is flexibility: you can buy and sell within the same minute and see the price before you execute. That flexibility has a cost, though: the unit’s market price can temporarily drift from the real value of the fund’s assets, especially in thinly traded funds. A non-traded fund is always bought at its net asset value, but you don’t know the exact price until after the valuation day.
What Are Exchange-Traded Funds (ETFs)?
An exchange-traded fund is a fund that aims to replicate the performance of a specific index rather than beat it, and its units trade on the exchange like shares. Buying one unit means you own a small share of every company or asset in that index.
That is why ETFs combine benefits that rarely come together:
- Instant diversification: a small amount gives you exposure to dozens of companies instead of a single share.
- Usually lower management fees: because the fund tracks an index rather than picking stocks actively.
- Transparency: you know in advance what the fund holds because it follows the index constituents.
- Trading flexibility: you can sell whenever you want during market hours.
ETFs listed on Tadawul range from funds tracking Saudi equity indices to others tracking sukuk, gold or foreign market indices.
Saudi ETFs or US ETFs?
Funds listed on Tadawul trade in riyals from the same local portfolio, while US funds need an international trading service and trade in dollars. US funds give you a much wider choice and very low management fees in the large funds, but international trading commissions are higher, and US tax may be withheld from distributions.
The practical rule: if you want exposure to the Saudi market, local funds are simpler; if you want global diversification with relatively large amounts, compare the total cost of both options before deciding.
Some brokers offer both. Derayah Financial, for example, lets you trade ETFs and REITs listed on Tadawul from your local stock portfolio, while its Derayah Global platform gives access to exchange-traded funds on global exchanges, including US ones. This suits investors who want to combine Saudi and global ETFs with one broker, but compare international trading commissions across brokers before deciding, because they vary more than the fixed local market commission.
Steps to Trade Investment Funds on Tadawul
- Open an investment portfolio with a licensed brokerage firm, if you don’t already have a stock portfolio.
- Search for the fund by name or symbol in your trading app, or in the funds section of the Saudi Exchange website.
- Read the fund summary: the index it tracks, its management fees and its distribution policy.
- Compare the price with the indicative net asset value the fund publishes, so you don’t buy at a large premium.
- Use a limit order rather than a market order, especially in thinly traded funds.
- Follow the fund regularly: distributions are credited to your portfolio automatically if the fund pays them.
Fund Trading Commissions and Fees
The standard trading commission for ETFs and REITs is the same as for shares: 0.155% of the trade value plus VAT on the commission, and some brokers offer discounts on it. But this isn’t the only cost.
Every fund deducts an annual management fee directly from its assets, so you won’t see it on your account statement, but it is reflected in your return. A third, hidden cost is the spread between the best buy price and the best sell price, which widens in thinly traded funds. An investor who buys and sells frequently pays these costs many times over, which is why ETFs suit long-term holding more than speculation.
How to Choose the Best Saudi ETFs
The best ETF is the one that tracks the index you want accurately and at the lowest cost. Compare funds tracking the same category using these criteria:
| Criterion | Why it matters |
|---|---|
| Index tracked | Decides what you actually own, and whether it is Shariah-compliant |
| Annual management fee | Deducted from your return every year |
| Tracking error | The lower it is, the closer the fund’s performance is to the index |
| Daily trading volume | Higher liquidity means a smaller bid-ask spread |
| Gap between price and net asset value | A large, persistent gap is a warning sign |
| Fund assets | Very small funds are more likely to be closed |
Are ETFs Halal?
It depends on the index the fund tracks, not on the fund structure itself. Some funds track Shariah-compliant indices and have a Shariah board overseeing them, while others track conventional indices that may include companies with non-compliant activities or debt. The reference is the fund’s prospectus and what it states about Shariah guidelines.
The same applies to US ETFs: there are funds that track Shariah indices, but most of the well-known funds are conventional.
Frequently Asked Questions About Trading Investment Funds
Can I buy my bank’s murabaha or equity fund from my stock portfolio?
Usually not, because these are unlisted public funds. You subscribe to them from the funds section of the fund manager’s app, not from the trading screen.
What is the minimum amount to buy a traded fund?
The price of one unit plus the commission. There is no minimum subscription as there is in some non-traded funds.
Can non-Saudis trade ETFs on Tadawul?
Yes. Residents and non-residents can trade on the Main Market, including traded funds, since the market was opened to all categories of foreign investors in February 2026.
Conclusion
Trading investment funds on Tadawul in practice means trading REITs and ETFs from your stock portfolio, with the same commission and hours as shares. Start with an index you understand, choose a fund with low fees and good liquidity, buy with a limit order, and hold it for the long term rather than trading in and out.
This content is for awareness purposes and is not investment advice.
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