Gulf Investment Corporation's (GIC) portfolio of Funds specialized in Gulf bonds and equities reveal a positive performance in the first half of 2010 where Year-to-Date (YTD) returns of GIC's Bond Fund in Kuwaiti Dinar and Gulf Bond Fund in US Dollar reached approximately 8.20% and 6.79% respectively. GIC's conventional Equity Fund, the Gulf Premier Fund generated YTD returns of around 3.14% during the first half of this year while its Islamic Equity Fund, the Gulf Islamic Fund exceeded in its performance over the MSCI index. The performance of these funds reflect the Gulf economy's robust position, against the background of the financial crisis that has enveloped global financial markets.
Elaborating on these results, Mr. Malek Issa Al Ajeel, Head of Business Development at GIC said: "These results and other remarkable returns achieved by these funds are based on a number of important factors, the most prominent of them being GIC's expertise in the regional markets and its major sectors for the last 26 years. The efficient performance and elite caliber of the GCC Equities and Bond teams, with enduring experience in the financial and investment fields, is the driving force behind this achievement. In addition to this, the support from the comprehensive analysis and market research conducted by the GCC Research team aids the Fund Managers in making integrated decisions in a constant and systematic manner".
Al Ajeel also highlighted the importance of the results achieved by the bond funds managed by GIC stating:" The total asset value of the managed funds in US Dollar and Kuwaiti Dinars is approximately US$ 235 million. This places GIC ahead of all specialized institutions in managing investment products in the bond sector". He also asserted that "GIC stands first in the region in introducing specialized investment management tools, thus earning the trust of its clientele with the specific aim of investing their savings in bonds launched by public and private sectors in the Gulf Region". Following is the performance highlights of the bond funds:
GIC Bond Fund in Kuwaiti Dinar: The Assets under Management (AUM) for this fund reached around US$115 million as of the first half of 2010. The YTD returns were 8.2% for the same period compared to around 3.22% achieved during the first half of the previous year. That this fund achieved positive returns becomes clearer once compared to the interest rate percentage on mid term deposits in Kuwaiti Dinars estimated at approximately 1.25%. Considering such remarkable performance, the fund is contemplating the distribution of cash profits of 5% for the year ending 2009, after being granted approval from the concerned bodies. Established in 2003 and targeted to achieve the highest returns, the fund aims at benefiting from opportunities in the GCC bond markets, while preserving capital through the application of rigorous risk management methodologies and practices.
Gulf Bond Fund in US Dollar: This fund maintained good performance during the first half of 2010 achieving returns of 6.79% compared to approximately 2.96% of the same period in the previous year, whereas the interest rate on short term deposits in US Dollar stood at 0.50%. Returns since inception of the fund aggregated to 17.9% and its AUM rose to US$120 million during the first half of 2010 compared to about US$76 million in the first half of 2009, recording a growth of approximately 58%. Established in 2005 and targeted to increase investment returns, the fund aims at investing in public and private bond issuance, while preserving capital through the application of rigorous risk management methodologies and practices.
Despite the negative impact of the financial crisis on the global markets, and its fallout on the region, GIC managed to protect its products against significant downside impact. In this context Al Ajeel remarked: "Such drawbacks restricted the overall performance of GIC's equity products. Against this background, GIC's capabilities are clearly reflected in the performance of GIC's equity investments through Gulf Premier fund and Gulf Islamic fund".
Gulf Premier Fund in US Dollar:
The fund generated YTD returns of 3.14% in the first half of 2010, in comparison with 1.25% on the MSCI GCC Index, indicating outperformance of 1.89%. Returns since inception of the fund aggregated to 84.92%, with the annualized returns since inception estimated at 8.5%. Meanwhile, the fund's AUM recorded a growth of 11.4%. Established in 2003 as the first pan-GCC equity fund in the region, and targeted to achieve appreciation on capital, the fund invests in the Gulf equity markets and is benchmarked against the MSCI GCC Index.
Gulf Islamic Fund:
The fund outperformed the MSCI GCC index by approximately 1% during the first half of 2010, and distributed cash dividends of 5% in 2009, despite the financial crunch witnessed by the global markets. It may be noted that the fund was ranked as the best-performing Islamic Fund by Zawya for its performance amongst its GCC peers for 2009, through achieving returns amounting to 24.6%. The fund was launched in 2008 as a key product within GIC's GCC portfolio, and targets investment in shares of Shariah compliant GCC companies.