Emirates NBD Saudi Equity Fund exceeds 18% YTD return as investors turn bullish on Kingdom

25 April 2018
Emirates NBD Saudi Equity Fund exceeds 18 YTD return as investors turn bullish on Kingdom

Emirates NBD Saudi Equity Fund exceeds 18% YTD return as investors turn bullish on Kingdom

  • Strong investor interest in Saudi equities following FTSE Russell Emerging Market upgrade
  • Upgrade to EM status by MSCI could lead to USD 40 billion in inflows to Saudi stocks
  • Foreigners have been net buyers of Saudi market every week this year, with total inflows exceeding USD 3 billion YTD
  • Fund has returned over 18% for the year
  • Inflows of USD 20 million in 2 months puts fund on track to reach target of USD 100 million by year end

Dubai, United Arab Emirates; 25thApril 2018: Emirates NBD Asset Management has announced strong first quarter performance by the ‘Emirates NBD Saudi Arabia Equity Fund’, which has returned more than 18% year to date and grown to a size of over USD 30 million since launching in December 2017. The sub-fund is available to investors through Emirates NBD SICAV (Luxembourg) and Emirates Portfolio Management PCC (Jersey).

The fund has been established to tap into renewed investor interest in the Saudi market, which was added to FTSE Russell’s Emerging Market Index at the end of March – a development that is likely to see around USD 5 billion from global investors allocated to the Kingdom’s equities over the next 12 months. The MSCI Emerging Market Index is widely expected to follow suit and announce the Kingdom’s inclusion as a constituent in June, providing a further boost to the market. The expected index weighting of Saudi Arabia is approximately 2.4%, which could translate into around USD 40 billion of foreign inflows.

Salman Bajwa, Senior Executive Officer at Emirates NBD Asset Management, commented:

"At a market capitalisation of around USD 500 billion and foreign ownership below 2%, Saudi Arabia is the largest stock market in the world that is yet to be fully accessible to overseas investors. Our investment team offers a decade of proven track record for investing in the Saudi market, and the opportunity to do so within a vehicle compliant with the highest international regulatory standards. Our local expertise enabled us to identify this investment opportunity, which led to the conversion of an existing fund to a Saudi-only fund in December 2017. We were fully aware of the constraints and requirements of international investors, and anticipated their needs by establishing one of the few globally available UCITS-compliant Saudi equities funds."

Emirates NBD Asset Management intends to collaborate with international partners to capitalise on growing investor interest in the Kingdom, meeting increased demand for products and opportunities from both GCC and international investors. The Saudi Arabia Equity Fund aims to provide investors with a managed portfolio of Saudi equities, with the objective of achieving capital appreciation over the medium- to long-term, along with the option of an income-paying share class. The fund employs an active management style, with a top-down approach to determine sector allocations complemented by a bottom-up approach to select individual securities. Deep market and sector research will exploit price distortions alongside specific opportunities that display potential for strong gains.

Usman Ahmed, Managing Director, Investments at Emirates NBD Asset Management, said:

The fund plays to Emirates NBD’s core strengths, with the team well-versed in managing Saudi equities since 2007, as part of the company’s wider regional mandates. The recent launch followed a strong 2017 for Emirates NBD Asset Management, which expanded its footprint across the GCC by adding some of the largest regional institutions as clients and increasing its penetration of the global investor-base, particularly in Europe.

Salman Bajwa concluded:

"Our latest fund is testament to Emirates NBD Asset Management’s position as a leading player in the region, fusing both local and global expertise. Our business achieves this position through the introduction of innovative products, created internally or through partnerships with global institutions such as Jupiter Asset Management and UTI International. This fund launch, which has already generated over 18% for investors, comes on the back of the Indian equities fund that we launched in Q4 2016, which returned 33% for our clients last year. We remain committed to bringing the most attractive opportunities to our investors, across the retail and institutional spectrum, in both Shari’a compliant and conventional formats"

Emirates NBD Asset Management offers regional and international investors a range of Shari’a-compliant and conventional funds, covering Equities, Fixed Income, Global Multi-Asset, and Real Estate (through Nasdaq Dubai-listed ENBD REIT). The portfolio range is structured to cater for diverse risk appetites. As at 31 March 2018, total Assets under Management (AuM) stood at USD 4.3 billion.