The National Commercial Bank announced the launch of the AlAhli Secured Saudi Trading Equity Fund “A”, a medium term, closed-end, Saudi Riyal denominated fund on Wednesday February 8th in Jeddah. This unique new fund is the latest addition by the Investment Services Division to the bank’s portfolio of funds investing in the Saudi equities which includes the AlAhli Saudi Trading Equity Fund and the AlAhli Saudi Dynamic Trading Equity Fund.
The new fund will invest in Shariah-compliant stocks listed in the Saudi exchange, cash, Murabaha and Murabaha Funds approved by the NCB’s Shariah Board and managed in compliance with the mutual funds regulations in the Kingdom.
“We have taken into consideration the major macro economic indicators and projections into the next three years as well as the current markets conditions to design this new and unique fund which will offer our investors up to 100% exposure to the upside of the market while attempting to limit their maximum loss to no more than 10%”, said Haitham Al Mubarak the Head of Portfolio Management at the Bank.
Moreover, the assets of the AlAhli Secured Saudi Trading Equity Fund will be managed actively on a daily basis to grow the capital when the local equities market is strong and to reduce exposure in times of declining markets. The probability of losing more than 10% of the original capital invested in the fund is reduced further by the protection underwritten by a global financial institution.
The minimum subscription to the AlAhli Secured Saudi Trading Equity Fund “A” is SR250, 000 and the admission date is the sooner of the date on which the Manager determines that the fund is fully subscribed or 60 calendar days after the first subscription day. Investors should regard this investment as an illiquid one because early redemptions are not permitted. Therefore it is highly recommended that they invest only those amounts that they can comfortably spare for the period of three years until the maturity date of the fund and keep sufficient amount of cash reserve on the side for emergency needs.
“This fund is ideally suited for investors who have enjoyed significant capital gains over the past few years by investing directly in Saudi shares or mutual funds. Many of these investors would now like to know that they will keep those profits but they also want to enjoy some exposure to the potential upside of the market over the next three years”, said Amr Banaja the Head of Marketing for the Asset Management Sector.
“It is also an excellent fund for first time investors in the Saudi market. These investors have not been comfortable with the risks of the other funds that are offered by banks which offer no element of capital protection. This fund is more suited for the more cautious investor.”
“Potential investors should understand that this fund is not designed to outperform the broader stock market because, due to its defensive investment objective, it will under most conditions not be fully invested in stocks”, cautioned Banaja. “Such investors should rather be choosing to invest in one of the two funds investing in the Saudi equities that the bank offers”.
Furthermore, the National Commercial Bank offers investors in the Kingdom two equities funds; the AlAhli Saudi Trading Equity Fund an open-end, high-risk fund generating long-term capital growth through investment in Shariah compliant Saudi equities which assets reached over SR10 billion. An investor who invested SR 1 million in this fund three years ago would now have an investment worth SR 7.3 million.
There is also the AlAhli Saudi Dynamic Trading Equity Fund which is an open-end fund with a built-in defensive feature that aims at protecting the capital in down markets. This fund has earned over 47% since launch in April 2005.
NCB was the first Saudi Arabian bank to introduce mutual funds in the Kingdom in 1979 and remains the leader of the industry because of its extensive experience and expertise in the field. The bank is acknowledged internationally as the pioneer and innovator in Shariah-compliant mutual funds. This achievement was recognized when NCB was awarded the Euromoney International Award for the Best Islamic Asset Management House for two consecutive years in 2003 and 2004.