RIYADH: A US dollar-denominated, open-ended, Shariah-compliant fund was launched Monday in Riyadh by NCB Capital, the investment banking arm of National Commercial Bank (NCB), the largest commercial bank in the Kingdom.
Under the new ‘Sukuk and Murabaha Fund’, NCB Capital will invest in sukuk and Murabaha issued by highly rated companies and governments.
“This is a mid-term fund that will provide investors with an opportunity to participate in a new expanding asset class — sukuk — as a developing asset, and that will help them to balance their overall portfolio risk,” Jawdat Al-Halabi, managing director of wealth and asset management at NCB Capital told newsmen at a press briefing here on Monday.
Explaining the objective of the launch, Al-Halabi noted that the new fund aims to generate a higher yield than money market investments and will benefit from a diversification across countries, sectors and companies in the GCC (Gulf Cooperation Council) region. The minimum subscription amount is fixed at $10,000, he added.
“This is an exciting addition to our growing portfolio of funds and supports our reputation of providing our clients with the best performing products,” Al-Halabi, said, adding that the fund seeks to stabilize investment portfolios while providing enhanced returns traditionally offered by money market investments.
Explaining why the new fund is an ideal opportunity for an investor, Al-Halabi said that GCC and some other emerging market’s economic fundamentals remain strong, while oil prices have dropped from their peaks, they remain relative to historical levels and are backed by strong future demand fundamentals. In addition to hydrocarbon revenues, he noted, favorable demographics as well as diversification of local economies into non-hydrocarbon sectors underpin the positive economic outlook.
In support of its claims to be a market leader in the provision of funds for investors, Al-Halabi recalled that an earlier NCB Capital fund, called the Saudi Midcap Equity Fund, has just won the MENA Newcomer Award from MENA Fund Manager magazine.
Other recent highlights of NCB Capital’s strengths in this area include: The Saudi Trading Equity Fund (STEF), which had the highest absolute return in its category last year, according to Zawya website. In addition, Al-Ahli Trading Fund denominated in Saudi riyals, the largest investment fund concerning assets, reached SR17.8 billion by the end of December 2009. According to Tadawul statistics, by the end of December 2009, NCB Capital possesses 33 percent of investment funds share in Saudi Arabia.
“As a result of its long track record, NCB Capital has a deep knowledge of the GCC regional markets and companies. With solid equity research capabilities, seasoned professionals who study the markets on a continuous basis, and diligent screening processes,” Hamed M. Fayez, head of asset management said. He added that NCB Capital asset management team has the ability to make the best available selection for the new portfolio
“The launch of this new fund reinforces the fact that we aim to provide the best products and levels of service to our investors, which is exactly what they should expect from the Kingdom’s largest manager of wealth.”