The EFG-Hermes Saudi Arabia Equity Fund November 2014 The ...
The EFG-Hermes Saudi Arabia Equity Fund November 2014 Fund Manager’s Strategy & Outlook
Objective
The Saudi market corrected sharply in November with the Tadawul All Share Index losing 14.1% for a YTD return of 1.1%. The Fund lost Fund Manager’s Strategy & Outlook 15.1% during the month and is now up 16.8% YTD. While the pullback was largely due to continued weakness in oil prices, the large initial The MEDA Fund added 5.1% in December to close 2007 at 50.4%, while public offering the National Bank The (NCB) and Etihad registering its sixthofconsecutive year Commercial of positive returns. Investment Etisalat’s (Mobily) corporate governance concerns added to its Manager’s decision to overweight the GCC markets at the start of the severity. year Turnoverthe was lower withmajority daily traded value averaging billion benefited Fund as the of the attribution for the USD 2007 1.97 returns came from the GCC. The MENA markets closed the year on a strong note, in November.
The principal objective of the Fund is medium and long term capital appreciation through investing in Saudi Arabian equity and equity related securities.
with the Saudi market leading the way for the second consecutive month wtih an 18%prices returndropped for December. UAE the markets also losing performed wellofwith Brent 18.3%The during month, a total 39.0% Dubai and Abu Dhabi advancing 11% and 9.5%, respectively. from its 2014 peak of USD 115.1 in June 2014. The international oil price
benchmark came under pressure from a global oil market oversupply
In North Africa, the Egyptian market maintained its strong momentum that is estimated 1 million barrels per However, thesector excesswas supply registering an 8% at return in December. Theday. financial services does not justify this sharp drop washoldings exacerbated by from heavy among the standout performers, and which the Fund’s benefited thisshort selling and a strengthening US Dollar. And while oil prices couldtocontinue rally. Moreover, the Fund continues to retain a minor exposure the Jordanian and in Moroccan markets. to weaken the short term, we don’t think that current prices are
sustainable over the medium term and believe that Saudi has the ability In the GCC the markets, the Saudi Arabian market displayed strong to weather storm with reserves of around 100% of GDPa and debt of performance throughout less than 5% of GDP. the month. The rally was broad based with the banking and petrochemical sectors leading the way. Speculation about opening the market to foreign investors in the near future coupled with the All sectors wereofdown in November. gradual restoration retail investor confidenceTelecoms, has helped petrochemicals drive that market and hotels The wereInvestment the worstManager performing sectors losing 26.9%, 20.8%, higher. has reshuffled the Fund’s positions to and 19.2% respectively. On the other capitalize on the strong two-month rally. hand transportation, cements, and
retail were among the best performing sectors losing 7.0%, 8.8%, and
In the UAE, the real estate sectorlosing was among top performing 9.3%. Banks outperformed 9.9%.theThe Investmentsectors. Manager The Fund was well positioned to benefit fromand this industrial rally and we maintain a and reduced exposure to telecoms, retail, investment positive viewexposure on the Dubai and Abu Dhabiand markets given the attractive increased to cements, banks, multi-investment companies valuations and compelling earnings growth outlook.
during the month.
The Investment Manager maintains a positive outlook on the MENA markets Oil prices might continue weaken over the coming period and going into 2008. Increased IPOtoand M&A activity, attractive valuations and the Saudi market to be thepossibility Investment earnings growth might rates, continue coupled with thevolatile. currencyHowever, revaluation should be the supporting for 2008. 2015 Furthermore, ongoingbudget structural Manager believes that drivers the upcoming government should changes with respect to corporate governance should performance result in an increased be the major determinant of short term market as weak oil interest foreign institutional instrumental driving to prices from are now largely pricedinvestors in, and who the were upcoming marketin opening the markets higher inshould 2007. be a catalyst for a strong rally. foreign investors
EFG-Hermes Saudi Arabia Equity Fund
Fund Performance TASI1 -14.1% 1.1% 25.5% 6.0% -3.1% 8.2% 27.5% -12.1%
Saudi Fund -15.1% 16.8% 48.8% 11.2% 1.8% 12.7% 22.4% 31.3%
Month to Date** Year to Date 2013 2012 2011 2010 2009 Inception to Date*
Difference -1.0% 15.7% 23.3% 5.2% 4.9% 4.5% -5.1% 43.4%
*Fund’s inception date was June 17th, 2008 ** MTD figures reflect performance between 31 October, 2014 and 30 November, 2014 1 TASI is a price return index
Fund Characteristics No. of Holdings Weighted Market Cap Dividend Yield* P/E Ratio 15
30 SAR 50.4 billion 3.7% 11.8
*Figure reflects the weighted average yield of a dividend-bearing security in the fund
Fund Metrics Saudi Fund 23.4% 1.0
Volatility Beta *
TASI 22.4% -
**Calculated vs. the Tadawul All Share Index (TASI) since the Fund’s inception
Top Three Equity Holdings Holding SAMBA FINANCIAL GROUP SAUDI BASIC INDUSTRIES Al Rajhi Bank
Sector Banks & Financial Services Petrochemical Industries Banks & Financial Services
% of NAV 8.7% 6.4% 5.1%
Fund Data NAV per Share Management Fee Minimum Subscription Subscription / Redemption Inception Date
SAR 13.1262 2% SAR 50,000 Twice Weekly June 17, 2008
Fund Identifiers
Tadawul All Share Index
ISIN Code Bloomberg Ticker Reuters Code
80% 60% 40%
XC000A1W4DX3 EFGSAUD AB LP65122906
Allocation by Economic Sector
20%
Multi‐ Investment 2.7%
0% -20%
Agriculture & Food Industries 4.3%
Real Estate Development 3.3%
Banks & Financial Services 30.8%
Hotel & Tourism 1.8%
-40% -60%
Tel: 9714-363 4047 / Fax: 9714-362 1171 e-mail : [email protected]
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
Feb-12
EFG-Hermes Asset Management
May-12
Nov-11
Aug-11
Feb-11
May-11
Nov-10
Aug-10
Feb-10
May-10
Nov-09
Aug-09
Feb-09
May-09
Nov-08
Aug-08
-80%
Insurance 6.5%
Transport 3.4% Telecom 3.0% Retail 12.5%
Cash 2.0%
Cement 10.4%
Petrochemical Industries 19.3%
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 Saudi Arabia 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.
Objective
The Saudi market corrected sharply in November with the Tadawul All Share Index losing 14.1% for a YTD return of 1.1%. The Fund lost Fund Manager’s Strategy & Outlook 15.1% during the month and is now up 16.8% YTD. While the pullback was largely due to continued weakness in oil prices, the large initial The MEDA Fund added 5.1% in December to close 2007 at 50.4%, while public offering the National Bank The (NCB) and Etihad registering its sixthofconsecutive year Commercial of positive returns. Investment Etisalat’s (Mobily) corporate governance concerns added to its Manager’s decision to overweight the GCC markets at the start of the severity. year Turnoverthe was lower withmajority daily traded value averaging billion benefited Fund as the of the attribution for the USD 2007 1.97 returns came from the GCC. The MENA markets closed the year on a strong note, in November.
The principal objective of the Fund is medium and long term capital appreciation through investing in Saudi Arabian equity and equity related securities.
with the Saudi market leading the way for the second consecutive month wtih an 18%prices returndropped for December. UAE the markets also losing performed wellofwith Brent 18.3%The during month, a total 39.0% Dubai and Abu Dhabi advancing 11% and 9.5%, respectively. from its 2014 peak of USD 115.1 in June 2014. The international oil price
benchmark came under pressure from a global oil market oversupply
In North Africa, the Egyptian market maintained its strong momentum that is estimated 1 million barrels per However, thesector excesswas supply registering an 8% at return in December. Theday. financial services does not justify this sharp drop washoldings exacerbated by from heavy among the standout performers, and which the Fund’s benefited thisshort selling and a strengthening US Dollar. And while oil prices couldtocontinue rally. Moreover, the Fund continues to retain a minor exposure the Jordanian and in Moroccan markets. to weaken the short term, we don’t think that current prices are
sustainable over the medium term and believe that Saudi has the ability In the GCC the markets, the Saudi Arabian market displayed strong to weather storm with reserves of around 100% of GDPa and debt of performance throughout less than 5% of GDP. the month. The rally was broad based with the banking and petrochemical sectors leading the way. Speculation about opening the market to foreign investors in the near future coupled with the All sectors wereofdown in November. gradual restoration retail investor confidenceTelecoms, has helped petrochemicals drive that market and hotels The wereInvestment the worstManager performing sectors losing 26.9%, 20.8%, higher. has reshuffled the Fund’s positions to and 19.2% respectively. On the other capitalize on the strong two-month rally. hand transportation, cements, and
retail were among the best performing sectors losing 7.0%, 8.8%, and
In the UAE, the real estate sectorlosing was among top performing 9.3%. Banks outperformed 9.9%.theThe Investmentsectors. Manager The Fund was well positioned to benefit fromand this industrial rally and we maintain a and reduced exposure to telecoms, retail, investment positive viewexposure on the Dubai and Abu Dhabiand markets given the attractive increased to cements, banks, multi-investment companies valuations and compelling earnings growth outlook.
during the month.
The Investment Manager maintains a positive outlook on the MENA markets Oil prices might continue weaken over the coming period and going into 2008. Increased IPOtoand M&A activity, attractive valuations and the Saudi market to be thepossibility Investment earnings growth might rates, continue coupled with thevolatile. currencyHowever, revaluation should be the supporting for 2008. 2015 Furthermore, ongoingbudget structural Manager believes that drivers the upcoming government should changes with respect to corporate governance should performance result in an increased be the major determinant of short term market as weak oil interest foreign institutional instrumental driving to prices from are now largely pricedinvestors in, and who the were upcoming marketin opening the markets higher inshould 2007. be a catalyst for a strong rally. foreign investors
EFG-Hermes Saudi Arabia Equity Fund
Fund Performance TASI1 -14.1% 1.1% 25.5% 6.0% -3.1% 8.2% 27.5% -12.1%
Saudi Fund -15.1% 16.8% 48.8% 11.2% 1.8% 12.7% 22.4% 31.3%
Month to Date** Year to Date 2013 2012 2011 2010 2009 Inception to Date*
Difference -1.0% 15.7% 23.3% 5.2% 4.9% 4.5% -5.1% 43.4%
*Fund’s inception date was June 17th, 2008 ** MTD figures reflect performance between 31 October, 2014 and 30 November, 2014 1 TASI is a price return index
Fund Characteristics No. of Holdings Weighted Market Cap Dividend Yield* P/E Ratio 15
30 SAR 50.4 billion 3.7% 11.8
*Figure reflects the weighted average yield of a dividend-bearing security in the fund
Fund Metrics Saudi Fund 23.4% 1.0
Volatility Beta *
TASI 22.4% -
**Calculated vs. the Tadawul All Share Index (TASI) since the Fund’s inception
Top Three Equity Holdings Holding SAMBA FINANCIAL GROUP SAUDI BASIC INDUSTRIES Al Rajhi Bank
Sector Banks & Financial Services Petrochemical Industries Banks & Financial Services
% of NAV 8.7% 6.4% 5.1%
Fund Data NAV per Share Management Fee Minimum Subscription Subscription / Redemption Inception Date
SAR 13.1262 2% SAR 50,000 Twice Weekly June 17, 2008
Fund Identifiers
Tadawul All Share Index
ISIN Code Bloomberg Ticker Reuters Code
80% 60% 40%
XC000A1W4DX3 EFGSAUD AB LP65122906
Allocation by Economic Sector
20%
Multi‐ Investment 2.7%
0% -20%
Agriculture & Food Industries 4.3%
Real Estate Development 3.3%
Banks & Financial Services 30.8%
Hotel & Tourism 1.8%
-40% -60%
Tel: 9714-363 4047 / Fax: 9714-362 1171 e-mail : [email protected]
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
Feb-12
EFG-Hermes Asset Management
May-12
Nov-11
Aug-11
Feb-11
May-11
Nov-10
Aug-10
Feb-10
May-10
Nov-09
Aug-09
Feb-09
May-09
Nov-08
Aug-08
-80%
Insurance 6.5%
Transport 3.4% Telecom 3.0% Retail 12.5%
Cash 2.0%
Cement 10.4%
Petrochemical Industries 19.3%
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 Saudi Arabia 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.
