Fund Manager's Strategy & Outlook - EFG Hermes
The EFG-Hermes Saudi Arabia Equity Fund February 2015
Fund Manager’s Strategy & Outlook
Objective
The Saudi market continued its positive performance in February with the Tadawul All Share Index gaining 4.9% for a YTD return of 11.8%. TheMEDA FundFund gained 4.8% during the month, and2007 is now up 14.2% The added 5.1% in December to close at 50.4%, whileYTD. Turnover continued to strengthen daily traded registering its sixth consecutive year with of positive returns.value The averaging InvestmentUSD 2.6 billiondecision in February. Manager’s to overweight the GCC markets at the start of the year Fund Manager’s Strategy & Outlook
benefited the Fund as the majority of the attribution for the 2007 returns came the GCC. The the MENA markets the year on a strong note,to all King from Salman ordered payout of closed a one-off two-month bonus with the Saudi market leading the way for thesocial secondsecurity consecutive month wtih and national state employees, pensioners, beneficiaries, an 18% return for December. The UAE markets also performed well with state-sponsored students. This came as part of a bundle of decisions Dubai and Abu Dhabi advancing 11% and 9.5%, respectively.
that included a reshuffle in key government positions and the consolidation 12 Egyptian government bodies into 2:itsCouncil Political and In North Africa,ofthe market maintained strong of momentum Security Affairs, Council of Economic and Development Affairs. registering an 8% and return in December. The financial services sector was The among King also the standout orderedperformers, the allocation and the of Fund’s SAR 20 holdings billionbenefited towardsfrom water this and rally. Moreover, the Fund continues to retain a minor exposure to electricity services. The additional outlays are expected to the add a Jordanian markets. minimumand of Moroccan SAR 90 billion to the 2015 budget of SAR 860 billion and should prop up consumer confidence and spending and mitigate the In the GCC markets, the Saudi Arabian market displayed a strong impact of lower oil prices on non-oil GDP growth in 2015.
performance throughout the month. The rally was broad based with the banking and petrochemical sectors leading the way. Speculation about Most sectors were up in investors February, with estate andwith industrial opening the market to foreign in the nearreal future coupled the gradual investment restoration ending of retail the month investoramong confidence the top has performers helped drive that rallying market 15.5% higher. The Investment Manager has reshuffled the were Fund’samong positions and 11.6%, respectively. Telecoms and cements theto worst capitalize on the strong two-month rally. respectively. Banks outperformed performers losing 3.0% and 2.6%,
gaining 6.9% while petrochemicals underperformed gaining 3.2%. The
In the UAE, the real estate sector was among the top performing sectors. Investment Manager reduced exposure to banks, hotel & tourism, and The Fund was well positioned to benefit from this rally and we maintain a industrial companies exposure to cement positive viewinvestment on the Dubai and Abu and Dhabiincreased markets given the attractive companies during the month. Cash was increased to 9.4% at month valuations and compelling earnings growth outlook.
end.
The Investment Manager maintains a positive outlook on the MENA markets going 2008.11.8% Increased IPO the and first M&A two activity, attractive valuations and After into rallying during months of the year, the Saudi earnings rates, to coupled with the currency market growth is expected slowdown in the shortrevaluation term. Thepossibility Investment should be the supporting drivers for 2008. Furthermore, ongoing structural Manager will be looking to utilize any pullback to reposition the Fund for changes with respect to corporate governance should result in an increased the first earnings of the year. who were instrumental in driving interest from foreignseason institutional investors the markets higher in 2007. EFG-Hermes Saudi Arabia Equity Fund
Tadawul All Share Index
80%
The principal objective of the Fund is medium and long term capital appreciation through investing in Saudi Arabian equity and equity related securities. Fund Performance Saudi Fund 4.8% 14.2% 17.2% 48.8% 11.2% 1.8% 12.7% 22.4% 50.3%
Month to Date** YTD 2014 2013 2012 2011 2010 2009 Inception to Date*
TASI1 4.9% 11.8% -2.4% 25.5% 6.0% -3.1% 8.2% 27.5% -5.1%
Difference -0.1% 2.4% 19.6% 23.3% 5.2% 4.9% 4.5% -5.1% 55.4%
*Fund’s inception date was June 17th, 2008 ** MTD figures reflect performance between 31 January, 2014 and 28 February, 2015 1 TASI is a price return index
Fund Characteristics No. of Holdings Weighted Market Cap Dividend Yield* P/E Ratio 15
33 SAR 47.8 billion 2.4% 14.7
*Figure reflects the weighted average yield of a dividend-bearing security in the fund
Fund Metrics Saudi Fund 23.3% 1.0
Volatility Beta *
TASI 22.2% -
**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 7.2% 6.2% 6.0%
Fund Data NAV per Share Management Fee Minimum Subscription Subscription / Redemption Inception Date
60%
SAR 15.034 2% SAR 50,000 Twice Weekly June 17, 2008
Fund Identifiers
40%
ISIN Code Bloomberg Ticker Reuters Code
20% 0%
XC000A1W4DX3 EFGSAUD AB LP65122906
Allocation by Economic Sector
-20% -40% Agriculture & Food Industries 6.8%
-60%
Feb-15
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
Feb-12
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%
Building & Construction 3.9%
Multi-Investment 2.5%
Tel: 9714-363 4047 / Fax: 9714-362 1171 e-mail : [email protected]
Insurance 5.0% Banks & Financial Services 31.0%
Industrial Investment 2.2%
EFG-Hermes Asset Management
Real Estate Development 3.2%
Transport 2.9% Telecom 2.8%
Petrochemical Industries 11.8% Retail 6.0%
Cash 9.4%
Cement 12.4%
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.
Fund Manager’s Strategy & Outlook
Objective
The Saudi market continued its positive performance in February with the Tadawul All Share Index gaining 4.9% for a YTD return of 11.8%. TheMEDA FundFund gained 4.8% during the month, and2007 is now up 14.2% The added 5.1% in December to close at 50.4%, whileYTD. Turnover continued to strengthen daily traded registering its sixth consecutive year with of positive returns.value The averaging InvestmentUSD 2.6 billiondecision in February. Manager’s to overweight the GCC markets at the start of the year Fund Manager’s Strategy & Outlook
benefited the Fund as the majority of the attribution for the 2007 returns came the GCC. The the MENA markets the year on a strong note,to all King from Salman ordered payout of closed a one-off two-month bonus with the Saudi market leading the way for thesocial secondsecurity consecutive month wtih and national state employees, pensioners, beneficiaries, an 18% return for December. The UAE markets also performed well with state-sponsored students. This came as part of a bundle of decisions Dubai and Abu Dhabi advancing 11% and 9.5%, respectively.
that included a reshuffle in key government positions and the consolidation 12 Egyptian government bodies into 2:itsCouncil Political and In North Africa,ofthe market maintained strong of momentum Security Affairs, Council of Economic and Development Affairs. registering an 8% and return in December. The financial services sector was The among King also the standout orderedperformers, the allocation and the of Fund’s SAR 20 holdings billionbenefited towardsfrom water this and rally. Moreover, the Fund continues to retain a minor exposure to electricity services. The additional outlays are expected to the add a Jordanian markets. minimumand of Moroccan SAR 90 billion to the 2015 budget of SAR 860 billion and should prop up consumer confidence and spending and mitigate the In the GCC markets, the Saudi Arabian market displayed a strong impact of lower oil prices on non-oil GDP growth in 2015.
performance throughout the month. The rally was broad based with the banking and petrochemical sectors leading the way. Speculation about Most sectors were up in investors February, with estate andwith industrial opening the market to foreign in the nearreal future coupled the gradual investment restoration ending of retail the month investoramong confidence the top has performers helped drive that rallying market 15.5% higher. The Investment Manager has reshuffled the were Fund’samong positions and 11.6%, respectively. Telecoms and cements theto worst capitalize on the strong two-month rally. respectively. Banks outperformed performers losing 3.0% and 2.6%,
gaining 6.9% while petrochemicals underperformed gaining 3.2%. The
In the UAE, the real estate sector was among the top performing sectors. Investment Manager reduced exposure to banks, hotel & tourism, and The Fund was well positioned to benefit from this rally and we maintain a industrial companies exposure to cement positive viewinvestment on the Dubai and Abu and Dhabiincreased markets given the attractive companies during the month. Cash was increased to 9.4% at month valuations and compelling earnings growth outlook.
end.
The Investment Manager maintains a positive outlook on the MENA markets going 2008.11.8% Increased IPO the and first M&A two activity, attractive valuations and After into rallying during months of the year, the Saudi earnings rates, to coupled with the currency market growth is expected slowdown in the shortrevaluation term. Thepossibility Investment should be the supporting drivers for 2008. Furthermore, ongoing structural Manager will be looking to utilize any pullback to reposition the Fund for changes with respect to corporate governance should result in an increased the first earnings of the year. who were instrumental in driving interest from foreignseason institutional investors the markets higher in 2007. EFG-Hermes Saudi Arabia Equity Fund
Tadawul All Share Index
80%
The principal objective of the Fund is medium and long term capital appreciation through investing in Saudi Arabian equity and equity related securities. Fund Performance Saudi Fund 4.8% 14.2% 17.2% 48.8% 11.2% 1.8% 12.7% 22.4% 50.3%
Month to Date** YTD 2014 2013 2012 2011 2010 2009 Inception to Date*
TASI1 4.9% 11.8% -2.4% 25.5% 6.0% -3.1% 8.2% 27.5% -5.1%
Difference -0.1% 2.4% 19.6% 23.3% 5.2% 4.9% 4.5% -5.1% 55.4%
*Fund’s inception date was June 17th, 2008 ** MTD figures reflect performance between 31 January, 2014 and 28 February, 2015 1 TASI is a price return index
Fund Characteristics No. of Holdings Weighted Market Cap Dividend Yield* P/E Ratio 15
33 SAR 47.8 billion 2.4% 14.7
*Figure reflects the weighted average yield of a dividend-bearing security in the fund
Fund Metrics Saudi Fund 23.3% 1.0
Volatility Beta *
TASI 22.2% -
**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 7.2% 6.2% 6.0%
Fund Data NAV per Share Management Fee Minimum Subscription Subscription / Redemption Inception Date
60%
SAR 15.034 2% SAR 50,000 Twice Weekly June 17, 2008
Fund Identifiers
40%
ISIN Code Bloomberg Ticker Reuters Code
20% 0%
XC000A1W4DX3 EFGSAUD AB LP65122906
Allocation by Economic Sector
-20% -40% Agriculture & Food Industries 6.8%
-60%
Feb-15
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
Feb-12
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%
Building & Construction 3.9%
Multi-Investment 2.5%
Tel: 9714-363 4047 / Fax: 9714-362 1171 e-mail : [email protected]
Insurance 5.0% Banks & Financial Services 31.0%
Industrial Investment 2.2%
EFG-Hermes Asset Management
Real Estate Development 3.2%
Transport 2.9% Telecom 2.8%
Petrochemical Industries 11.8% Retail 6.0%
Cash 9.4%
Cement 12.4%
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.
