Bahrain-based regional investment bank, Securities & Investment Company (SICO), has announced that its flagship Khaleej Equity Fund recently completed the first 10 years of operation since being launched at the end of March 2004.
Since inception, the fund has achieved a return of 203.9 per cent compared with 77.4 per cent by its benchmark, the S&P GCC Composite Index, and has outperformed the index for the past seven consecutive years. Its annualised return over the past 10 years has been 11.7 per cent versus 5.9 per cent by the index, and it has consistently ranked in the top quartile of its peers. At the end of its first 10-year period, the fund posted its highest-ever NAV of $ 303.89 million. Saudi Arabia and the UAE comprised 70 per cent of the fund's allocation to GCC countries.
Shakeel Sarwar, Head of Asset Management at SICO, said, "We expect the positive momentum in GCC markets to remain intact. As measured by the S&P GCC Index, the GCC markets have increased 15 per cent during the first five months of 2014, compared with 25 per cent for the whole of 2013.
"Although we believe that valuations of small and mid-cap companies in the region are stretched, we expect further upside potential among the large blue chip names, particularly in the UAE and Saudi Arabia. The UAE real estate market is experiencing a resurgence due to increased tourist arrivals and funds flows from regional economies such as India, Pakistan and Egypt; while UAE banks and large real estate developers such as Emaar stand to benefit from this trend.
"Earnings of companies listed in Saudi Arabia will be driven primarily by Government spending and increased personal consumption. The Saudi Government embarked upon an aggressive 10-year spending programme five years ago and, with oil prices currently at elevated levels, we expect Government spending to remain healthy. Increased personal consumption in Saudi Arabia is driven by favourable demographics and initiatives taken by the Kingdom to increase employment of Saudi nationals."
Ms Najla M. Al Shirawi, Chief Executive Officer of SICO, said, "I am proud of our asset management team headed by Shakeel Sarwar for their professional management of the Fund over the past 10 years. The team's stability and longevity are unmatched in the industry, and have been a key factor in the Fund's consistent performance.
"The proven track record of the Khaleej Equity Fund results from SICO's unique conservative asset allocation and prudent bottom-up stock picking, which focuses on the long-term potential of underlying equities rather than on short-term momentum-driven rallies. In addition, our regional insight, quality of research, and knowledge of investee companies are other key factors that have enabled SICO to provide consistent and stable long-term returns to our investors."