Kuwait's Global Investment House “Global” announced today that its EPADI Fund (Energy, Petrochemical, and Downstream Industries Fund) has produced a return of 31.3% for its investors during the first seven months of 2009, making it one of the best performing funds in Kuwait as well as in the GCC region. In comparison, the MSCI GCC Index, the regional equity benchmark index, is up only 16.5% over the corresponding period. The Fund performance has been driven by a rebound in regional equity markets as a result of rising oil prices and a revival in global investor sentiment.
Commenting on the fund’s performance, the Head of GCC Asset Management at Global, Mr. Shahid Hameed said, “We are proud of the performance of our EPADI Fund, which is amongst the top funds in the region this year. This performance can be attributed to our rigorous research driven bottom-up investment process which allows us to identify the most attractive stocks across the region.”
The Global EPADI Fund, which is amongst the few energy sector funds in the region, seeks to achieve long-term capital appreciation by investing in companies principally engaged in energy, petrochemicals and downstream industries listed on the Arabian stock exchanges. The investment process is based on a bottom-up stock selection methodology along with a macroeconomic overlay to identify growth opportunities throughout the MENA region. Given the fact that the Gulf economies are largely oil driven, the Fund provides investors a good tool to play the economic growth in the region.
Mr. Shahid added, “The fund offers its investors a diversified exposure to an industry of strategic importance to the Gulf region. EPADI offers investors a well balanced exposure to the petrochemical and energy related companies listed across the region with adequate cross country diversification that is targeted towards risk optimization. At the same time, the fund also provides diversification within the sector by investing in companies engaged in different business activities in the various energy sub-sectors.”
The stellar performance of the Global EPADI Fund this year can mainly be attributed to superior stock selection and asset allocation. Timely deployment of cash into Saudi, Qatar, and Oman allowed the fund to benefit from the recent rally in these markets. The Saudi market, in particular, has contributed positively to the fund’s performance, with the Saudi equities benchmark index (Tadawul) rising by 38% from its lows earlier in the year. Investments in Saudi Arabia comprised 56% of the total net asset value of the Fund at the end of July.
Key holdings in selective energy stocks have also contributed to EPADI’s strong performance. Petrochemicals comprise 40% of the fund’s investments and significant holdings in the sector include SABIC and Petro Rabigh & Refining. Other blue-chip stocks that have also contributed positively towards the fund performance include SAFCO and Industries Qatar.
In view of the recent strong performance by the regional equity markets, Mr. Hameed stated “Despite strong performance in the past four months, GCC stock markets have continued to lag the global emerging markets this year. The MSCI GCC index is up only 16.5% while the MSCI Emerging Markets Index has recorded a gain of 48.8% so far this year. As a result, GCC markets are now trading at a discount to the global emerging markets whereas traditionally regional equity markets have commanded a premium over their global peers due to the greater growth potential that our economies offer. This discount offers attractive investment opportunities in the regional equity markets in general and the petrochemicals sector in particular for the next few quarters”.
Mr. Hameed further added, “Although interim volatility cannot be ruled out and international investment landscape will continue to dictate sentiment in the region in the short term, Gulf equities continue to be an attractive destination for long term investing.”
