¬Fund Manager's Strategy & Outlook
EFG-Hermes “Hasaad” Freestyle Saudi Equity Fund September 2016
Fund Manager’s Strategy & Outlook
Objective
The Saudi market resumed its drop in September with the S&P Saudi efg.Fund Strategy & Outlook Sharia TRManager’s Index losing 7.5% for a YTD loss of 12%. The Fund lost 5.3%
The principal objective of the Fund is medium to long term capital appreciation by investing in Sharia compliant equities listed on the Tadawul exchange.
during the month and is now down 13.5% YTD. Turnover fell further
Fund Performance
The MEDA Fund added 5.1% in December to close 2007 at 50.4%, while MoM withits daily value averaging SAR 2.78 billion the summer registering sixthtraded consecutive year of positive returns. The as Investment Manager’s decision to overweight the GCC markets at the start of the year period has historically seen slower activity. benefited the Fund as the majority of the attribution for the 2007 returns came fromcongress the GCC. overwhelmingly The MENA marketsover-ridded closed the year on a strong note,veto The US President Obama’s with the Saudi market leading the way for the second consecutive month wtih on18% a billreturn that would allow families of markets the 9/11also terrorist attack an for December. The UAE performed wellvictims with to Dubai and Saudi Abu Dhabi advancing 11% and Against 9.5%, respectively. sue the government. Justice Sponsors of Terrorism Act
grants exception to the legal principle of sovereign immunity in cases In NorthanAfrica, the Egyptian market maintained its strong momentum registering an 8% return The financial services sector was the of terrorism on US soil.in December. This would have consequences to sour among the standout performers, and the Fund’s holdings benefited from this strong relationship that Saudi Arabia and the USA share and hence have rally. Moreover, the Fund continues to retain a minor exposure to the negativeand implications on the regional geopolitical front as well as Saudi Jordanian Moroccan markets. funds/investments in the USA.
In the GCC markets, the Saudi Arabian market displayed a strong performance throughout month. The rally was broad based with the All TASI sectors were the down in September, without exception. Media, banking and petrochemical sectors leading the way. Speculation about Hotels, the and Building/Construction among with thethe worst opening market to foreign investors insectors the near were future coupled gradual restoration of retail investor confidence has and helped16.1% drive that market performing sectors losing 22%, 19.6%, respectively. higher. The Investment Manager has reshuffled the Fund’s positions to Petrochemicals outperformed losing 2.8%. The Investment Manager capitalize on the strong two-month rally.
increased
exposure
to
select
Banks,
Petrochemicals,
Hasaad -5.3% -13.5% -13.3% -25.3%
Month to Date* YTD 2015 Inception to Date**
S&P TR -7.5% -12.0% -11.6% -32.5%
1
Difference 2 2.2% -1.5% -1.7% 7.2%
* MTD figures reflect performance between August 31, 2016 and September 30, 2016 **Fund’s inception date was July 1, 2015 1 S&P Saudi Sharia TR Index 2 For comparative purposes only; the fund is managed on an absolute return basis
Fund Characteristics No. of Holdings Weighted Market Cap Dividend Yield* P/E Ratio 16
20 SAR 61.4 billion 5.9% 15.1
*Figure reflects the weighted average yield of a dividend-bearing security in the fund
Fund Metrics Hasaad 16.4% 0.65
Volatility Beta *
S&P TR 23.8% -
**Calculated vs. the S&P Saudi Sharia TR Index since the Fund’s inception
and
In the UAE, the real names, estate sector among the top performing Food/Agriculture whilewas reducing exposure to thesectors. consumer The Fund was well positioned to benefit from this rally and we maintain a related view names cashDhabi to 7.2% at thegiven month positive on and the decreased Dubai and Abu markets theend. attractive valuations and compelling earnings growth outlook.
Top Three Equity Holdings
Brent gained 4.3% in September to end the month at USD 49.06/barrel.
Holding Saudi Basic Industries Al Rajhi bank Advanced Petrochemical Co
The Investment a positive 32.5 outlook MENA There marketswere OPEC agreed Manager to freezemaintains output between toon 33the mbpd. going into 2008. Increased IPO and M&A activity, attractive valuations and no details on how much each member would produce, but the fact that earnings growth rates, coupled with the currency revaluation possibility Saudi be Arabia and otherdrivers OPECfor members are now willing accept that should the supporting 2008. Furthermore, ongoingtostructural changes corporate shouldbodes result in an to increased floodingwith therespect markettowith crudegovernance oil isn’t helping, well support oil interest from foreign institutional investors who were instrumental in driving prices in the short term. the markets higher in 2007.
NAV per Share Management Fee Minimum Subscription Subscription / Redemption Inception Date
Sector Petrochemical Industries Banks & Financial Services Petrochemical Industries
% of NAV 10.2% 7.5% 5.3%
Fund Data 7.4662 1.25% SAR 10,000 Twice Weekly July 1st,2015
With weak third quarter results expected, oil prices volatile, the implementation of the NTP 2020, US elections and upcoming budget, the Investment Manager maintains his cautious view on the market in the short term.
Fund Identifiers ISIN Code Bloomberg Ticker Reuters Code
XC000A14XYV2 EFGHFSE AB Equity LP 68330160
Allocation by Economic Sector Hasaad Fund
S&P Saudi Sharia TR Index SPSHSART
25% 15% 5%
Telecom & IT 5.1% Retail 12.0%
Transport 3.1%
Agriculture & Food Industries 4.8% Banks & Financial Services 11.1%
-5% -15% -25% -35%
Petrochemical Industries 17.5%
Cash 33.5%
-45%
Insurance 2.6%
EFG-Hermes Asset Management Tel: 966 11 293 8048/9 Fax: 966 11 293 8032 e-mail : [email protected]
Hotel & Tourism 3.8%
Energy & Utilities 1.4%
Cement 5.1%
This update does not constitute an offer of shares and should not be relied upon by any person acquiring or otherwise dealing in shares of the company. Subscription of shares in the company may only currently be made on the terms of the Information Memorandum of the company. It should be noted that investment in the fund is only suitable for sophisticated investors who are aware of the risks of investing in the EFG-Hermes “Hasaad” Freestyle Saudi Equity Fund and should be regarded as long term. Please remember that past performance is not necessarily a guide to the future. Market and currency movements may cause the value of shares and the income from them to fluctuate and you may get back less than you invested when you decide to sell your share.
Fund Manager’s Strategy & Outlook
Objective
The Saudi market resumed its drop in September with the S&P Saudi efg.Fund Strategy & Outlook Sharia TRManager’s Index losing 7.5% for a YTD loss of 12%. The Fund lost 5.3%
The principal objective of the Fund is medium to long term capital appreciation by investing in Sharia compliant equities listed on the Tadawul exchange.
during the month and is now down 13.5% YTD. Turnover fell further
Fund Performance
The MEDA Fund added 5.1% in December to close 2007 at 50.4%, while MoM withits daily value averaging SAR 2.78 billion the summer registering sixthtraded consecutive year of positive returns. The as Investment Manager’s decision to overweight the GCC markets at the start of the year period has historically seen slower activity. benefited the Fund as the majority of the attribution for the 2007 returns came fromcongress the GCC. overwhelmingly The MENA marketsover-ridded closed the year on a strong note,veto The US President Obama’s with the Saudi market leading the way for the second consecutive month wtih on18% a billreturn that would allow families of markets the 9/11also terrorist attack an for December. The UAE performed wellvictims with to Dubai and Saudi Abu Dhabi advancing 11% and Against 9.5%, respectively. sue the government. Justice Sponsors of Terrorism Act
grants exception to the legal principle of sovereign immunity in cases In NorthanAfrica, the Egyptian market maintained its strong momentum registering an 8% return The financial services sector was the of terrorism on US soil.in December. This would have consequences to sour among the standout performers, and the Fund’s holdings benefited from this strong relationship that Saudi Arabia and the USA share and hence have rally. Moreover, the Fund continues to retain a minor exposure to the negativeand implications on the regional geopolitical front as well as Saudi Jordanian Moroccan markets. funds/investments in the USA.
In the GCC markets, the Saudi Arabian market displayed a strong performance throughout month. The rally was broad based with the All TASI sectors were the down in September, without exception. Media, banking and petrochemical sectors leading the way. Speculation about Hotels, the and Building/Construction among with thethe worst opening market to foreign investors insectors the near were future coupled gradual restoration of retail investor confidence has and helped16.1% drive that market performing sectors losing 22%, 19.6%, respectively. higher. The Investment Manager has reshuffled the Fund’s positions to Petrochemicals outperformed losing 2.8%. The Investment Manager capitalize on the strong two-month rally.
increased
exposure
to
select
Banks,
Petrochemicals,
Hasaad -5.3% -13.5% -13.3% -25.3%
Month to Date* YTD 2015 Inception to Date**
S&P TR -7.5% -12.0% -11.6% -32.5%
1
Difference 2 2.2% -1.5% -1.7% 7.2%
* MTD figures reflect performance between August 31, 2016 and September 30, 2016 **Fund’s inception date was July 1, 2015 1 S&P Saudi Sharia TR Index 2 For comparative purposes only; the fund is managed on an absolute return basis
Fund Characteristics No. of Holdings Weighted Market Cap Dividend Yield* P/E Ratio 16
20 SAR 61.4 billion 5.9% 15.1
*Figure reflects the weighted average yield of a dividend-bearing security in the fund
Fund Metrics Hasaad 16.4% 0.65
Volatility Beta *
S&P TR 23.8% -
**Calculated vs. the S&P Saudi Sharia TR Index since the Fund’s inception
and
In the UAE, the real names, estate sector among the top performing Food/Agriculture whilewas reducing exposure to thesectors. consumer The Fund was well positioned to benefit from this rally and we maintain a related view names cashDhabi to 7.2% at thegiven month positive on and the decreased Dubai and Abu markets theend. attractive valuations and compelling earnings growth outlook.
Top Three Equity Holdings
Brent gained 4.3% in September to end the month at USD 49.06/barrel.
Holding Saudi Basic Industries Al Rajhi bank Advanced Petrochemical Co
The Investment a positive 32.5 outlook MENA There marketswere OPEC agreed Manager to freezemaintains output between toon 33the mbpd. going into 2008. Increased IPO and M&A activity, attractive valuations and no details on how much each member would produce, but the fact that earnings growth rates, coupled with the currency revaluation possibility Saudi be Arabia and otherdrivers OPECfor members are now willing accept that should the supporting 2008. Furthermore, ongoingtostructural changes corporate shouldbodes result in an to increased floodingwith therespect markettowith crudegovernance oil isn’t helping, well support oil interest from foreign institutional investors who were instrumental in driving prices in the short term. the markets higher in 2007.
NAV per Share Management Fee Minimum Subscription Subscription / Redemption Inception Date
Sector Petrochemical Industries Banks & Financial Services Petrochemical Industries
% of NAV 10.2% 7.5% 5.3%
Fund Data 7.4662 1.25% SAR 10,000 Twice Weekly July 1st,2015
With weak third quarter results expected, oil prices volatile, the implementation of the NTP 2020, US elections and upcoming budget, the Investment Manager maintains his cautious view on the market in the short term.
Fund Identifiers ISIN Code Bloomberg Ticker Reuters Code
XC000A14XYV2 EFGHFSE AB Equity LP 68330160
Allocation by Economic Sector Hasaad Fund
S&P Saudi Sharia TR Index SPSHSART
25% 15% 5%
Telecom & IT 5.1% Retail 12.0%
Transport 3.1%
Agriculture & Food Industries 4.8% Banks & Financial Services 11.1%
-5% -15% -25% -35%
Petrochemical Industries 17.5%
Cash 33.5%
-45%
Insurance 2.6%
EFG-Hermes Asset Management Tel: 966 11 293 8048/9 Fax: 966 11 293 8032 e-mail : [email protected]
Hotel & Tourism 3.8%
Energy & Utilities 1.4%
Cement 5.1%
This update does not constitute an offer of shares and should not be relied upon by any person acquiring or otherwise dealing in shares of the company. Subscription of shares in the company may only currently be made on the terms of the Information Memorandum of the company. It should be noted that investment in the fund is only suitable for sophisticated investors who are aware of the risks of investing in the EFG-Hermes “Hasaad” Freestyle Saudi Equity Fund and should be regarded as long term. Please remember that past performance is not necessarily a guide to the future. Market and currency movements may cause the value of shares and the income from them to fluctuate and you may get back less than you invested when you decide to sell your share.
