Saleem Khokhar, the Head of Equities at NBAD Asset Management Group
The National Bank of Abu Dhabi (NBAD) has rebranded several of its equity funds moving investment focus to a broader MENA focus from a UAE emphasis. The expanded scope, diversification and geography of the rebranded regional funds will offer new and exciting opportunities to institutional and retail investors.
“It is time to make this adjustment to our funds to maximise growth potential for our investors. The move also offers NBAD fund managers broader investment options and greater risk control mechanisms,” says Saleem Khokhar, the Head of Equities at NBAD Asset Management Group.
He adds: “MENA markets have performed strongly over the past few years and have registered double digit gains in 2014. Based on the strong underlying fundamentals we believe MENA will continue to perform through 2020 and beyond. The rise in oil price over the past decade as well as a deliberate diversification to non-hydrocarbon revenue streams have helped to make many economies in the region among the richest and fastest growing across the globe. Moreover, consistent and large budget surpluses have allowed many GCC countries to pay down debt and build large currency reserves. The expansion of economic activity has been impressive and points to robust and strong GDP growth for the next decade.”
The adjustment applies to NBAD UAE Islamic Fund (Al Naeem), rebranded to NBAD Islamic MENA Growth Fund; NBAD GCC Opportunities (AJAJ), rebranded to NBAD MENA Growth Fund; and NBAD UAE Distribution, rebranded to NBAD MENA Income & Growth Fund.
UAE and Qatar equity markets have been upgraded to Emerging Market status and now form part of the MSCI Emerging Market Index. The upgrade has attracted strong investor interest this coupled with a number of other catalysts has lead to an almost three fold increase in the daily average value traded on a year on year comparison. For the MENA region as a whole daily average traded value has also increased significantly by more than 70% to reach $3.46 billion versus the daily average traded value of $2.0 billion in 2012.
Musa Haddad, a Fund Manager at NBAD Asset Management Group, notes that the S&P Pan-Arab Composite Index, an index that follows the wider MENA region, has recorded healthy returns over the past four years and includes markets such as GCC, Egypt, Lebanon and Morocco.
“Going forward we see better liquidity and stronger depth in Mena. In addition, increased foreign ownership limits and improving transparency will no doubt boost additional flow of funds from foreign, regional, institutional and retail investors both active passive,” says Mr. Haddad. “Adding MENA equities to a global portfolio provides a good source of diversification. From January 2000 to Jan 2014 a weekly correlation study shows that the MENA equities have a low 0.53 correlation with developed markets.
Mr. Khokhar adds: “MENA markets currently trade at a price-to-earnings (PE) ratio of 15, and Price-to Book of 2 while offering attractive growth potential and good dividend yield.
“The MENA region provides an exciting opportunity to invest in high growth assets while diversifying risk of global or single country exposure.”