Jadwa Arab Markets Equity Fund - Jadwa Investment
Jadwa Arab Markets Equity Fund 2017 Semi Annual Report
A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: Phone +966 11 279-1111 Fax +966 11 279-1571 P.O.Box 60677, Riyadh 11555, Saudi Arabia
) مرخصة من قبل هيئة السوق المالية بموجب7878110101 شركة مساهمة سعودية مقفلة (رقم السجل التجاري 83870-71 ترخيص رقم 77777 الرياض38311 ب. ص+233 77 112-7717 فاكس+233 77 112-7777 اإلدارة العامة هاتف المملكة العربية السعودية
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
1
Contents Investment Fund Information ........................................................................................................................................... 3
Fund Manager’s Commentary ......................................................................................................................................... 5
Fund Performance ............................................................................................................................................................ 7
Fund Expenses .................................................................................................................................................................. 8
Disclosures ......................................................................................................................................................................... 9
Annex A: Auditor Statement and Financial Statements ............................................................................................ 10
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
2
Investment Fund Information
Fund Name Jadwa Arab Markets Equity Fund
Benchmark S&P Pan Arab Shariah Index (TR)
Inception Date June 30, 2007G
Investment Objective and Policies To provide long-term capital growth by investing in Arabian equity markets, in accordance with Shariah investment guidelines of the Fund Manager’s Shariah Committee. The Jadwa Arab Markets Equity Fund invests in a diversified portfolio of Shariah-compliant equities listed in various Arabian stock markets. It may also invest up to 25% of its assets in other Shariah- compliant equity funds in the region. The Fund offers investors the ability to benefit from the strong potential growth in the region’s capital markets by providing access to a wide range of equity investments. The Fund Manager aims to achieve long-term capital growth with effective management, and a multi-strategy approach. The Fund portfolio is constructed utilizing a bottom-up approach to identify securities that are expected to generate longterm capital appreciation. The Fund Manager utilizes a combination of proprietary company research and third-party research to regularly assess market conditions and the individual securities in order to efficiently manage the Fund. The Fund shall invest not less than 50% of its net assets in equity securities listed on the Arabian stock markets and approved by the Fund’s Shariah committee. During periods of perceived weak performance of equity markets, the Fund Manager may shift up to 50% of the Fund’s assets to short-term Murabaha placements. The Fund shall not invest more than 10% of its net assets in securities of any one issuer. However, where a listed company’s market value exceeds 10% of total market capitalization of the investable universe of all Shariah-compliant listed companies, the Fund Manager is permitted to hold such company’s shares up to the actual higher percentage. The investable universe of Shariah-compliant listed companies shall be reviewed and updated quarterly
Distribution of Income and Gain Policy Dividends and/or income are reinvested in the Fund and not paid out or distributed to investors.
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
3
Fund Manager Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by Capital Market Authority under license number 37-6034 Head Office: P.O.Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571 Fund Custodian Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by Capital Market Authority under license number 37-6034 Head Office: P.O.Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571 The custodian is responsible for taking custody and protecting fund assets on behalf of all unitholders and for taking all required administrative measures in regards to the custody of the fund’s assets.
Fund Auditor KPMG Al Fozan PO BOX 92876 Al Riyadh 11663 Kingdom of Saudi Arabia
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
4
Fund Manager’s Commentary At Jadwa Investment, we are committed to our research-driven, high conviction approach to investing, which we believe can generate above-average risk-adjusted returns for our clients. Our investment strategy is based on long term views founded upon economic, industry sector and company level fundamentals. The year ended 31 December 2016 was a challenging year in capital markets globally characterized by high levels of uncertainty. Risks emanated from all corners of the world. Oil prices collapsed at the start of the year and then more than doubled as global economic activity stabilized, US oil production levels declined and OPEC stepped up to reach supply cut agreements. Arab equity markets were no different, with markets going through bouts of extreme optimism and pessimism over the course of the year. Uncertainty was greatest in Saudi Arabia and Egypt. GCC markets were a microcosm of global uncertainty, none more so than in Saudi Arabia where government measures to rationalize the fiscal burden and reform the economy initially added to economic uncertainty. Given its overall offbenchmark status, international and regional investors shunned Saudi’s capital markets as policy uncertainty gripped local investors. Investors showed preference for on benchmark markets of UAE and Qatar. The two regional markets benefitted from passive and active inflows especially as interesting in market gathered pace over the course of the year. Nonetheless investors returned in full force to Saudi market towards the end of the year as initial negativity was deemed excessive and the outlook for the Saudi economy improved significantly given successful debut international bond issue by the government as well as positive steps taken by the Regulator to enable the inclusion of Saudi market into emerging market equity indices Egypt’s problems were driven by FX markets. Floatation of the currency accompanied by an economic program supported by the International Monetary Fund brought improving capital inflows to the Egyptian market and should lead to the gradual stabilization of the market and the economy. Jadwa Arab Markets Equity Fund had a 9.15% cumulative return for the 12 months ended 30 June, 2017 taking the Fund’s total annualized return since inception on 30 June 2007 to 9.71%. In comparison, the Fund’s benchmark, the Standard & Poor’s Pan Arab Shariah Total Return Index, achieved a total return of 12.76% for the 12 month period ended 30 June, 2017. The benchmark’s total annualized return since the Fund’s inception reached 1.45%.
For more details on performance please refer to the Fund Performance section.
Turnover
1H 2017 Fund
61.23%
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
5
Equity Allocation
% of Net Assets 31-Dec-2016
% of Net Assets 30-Jun-2017
Equity
97.33%
Equity
95.28%
Cash
2.67%
Cash
4.72%
Total
100.00%
Total
100.00%
Sector
% of Net Assets 31-Dec-2016
Sector
% of Net Assets 30-Jun-2017
Materials
18.73%
Materials
20.05%
Banks
14.74%
Banks
15.01%
Food & Beverages
11.91%
Transportation
12.07%
Top 3 Sector Allocations
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
6
Fund Performance
1-Year
3-Year
5-Year
Since Inception
Fund
9.15%
3.53%
77.77%
152.76%
Benchmark
12.76%
-14.31%
25.99%
15.51%
Fund
Benchmark
2007
40.70%
36.67%
2008
-40.49%
-52.42%
2009
29.78%
23.90%
2010
19.53%
14.82%
2011
-2.88%
-5.46%
2012
17.60%
9.04%
2013
42.76%
26.58%
2014
7.95%
-2.28%
2015
2.11%
-14.70%
2016
6.05%
10.80%
1H 2017
2.10%
3.61%
*from Inception June 30, 2007
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
7
Fund Expenses
Expenses for 1H 2017 (SAR) Management Fees
170,096.07
Fund Board
7,438.36
Auditing Fees
9,917.81
Custodian's Fees
10,468.13
Fund Administration Fees
5,234.07
Tadawul Fees CMA Fees
3,719.18
Legal Expenses
-
Cost of Sharia-compliant finance (when required)
-
Registration / Fees of Unit Processing
-
Other expenses
15,372.88
Total
222,246.50
Cost/Average Assets Ratio
0.30%
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
8
Disclosures Material Changes No Material Changes during 1H 2017.
For additional information please refer to the Terms & Conditions available on www.jadwa.com
Kindly refer to Annex A for auditor statements regarding the Fund.
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
9
Annex A: Auditor Statement and Financial Statements
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
10
Disclaimer: Jadwa Investment or its directors, staff, or affiliates makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in this material. It is not the intention of this material to be used or deemed as an advice, option or for any action that may take place in future. Unless otherwise stated, all information contained in this material shall not be reproduced, in whole or in part, without the specific written permission of Jadwa Investment. The content of this document is for information purposes only. Jadwa Investment does not hold itself out as providing legal, financial or other advice via this document. Investments in Jadwa's products are governed by their Terms and Conditions. Some products are exposed to foreign currencies and changes in currency exchange rates may have an adverse effect on the value and price. The product's value is subject to fluctuations and the investor may not receive the full amount that is originally invested. The information provided in this document may be changed at any time without prior notice. Past performance is not indicative of future returns. Jadwa Investment is authorized and regulated by the Capital Market Authority of Saudi Arabia.
A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: Phone +966 11 279-1111 Fax +966 11 279-1571 P.O.Box 60677, Riyadh 11555, Saudi Arabia
) مرخصة من قبل هيئة السوق المالية بموجب7878110101 شركة مساهمة سعودية مقفلة (رقم السجل التجاري 83870-71 ترخيص رقم 77777 الرياض38311 ب. ص+233 77 112-7717 فاكس+233 77 112-7777 اإلدارة العامة هاتف المملكة العربية السعودية
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
1
Contents Investment Fund Information ........................................................................................................................................... 3
Fund Manager’s Commentary ......................................................................................................................................... 5
Fund Performance ............................................................................................................................................................ 7
Fund Expenses .................................................................................................................................................................. 8
Disclosures ......................................................................................................................................................................... 9
Annex A: Auditor Statement and Financial Statements ............................................................................................ 10
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
2
Investment Fund Information
Fund Name Jadwa Arab Markets Equity Fund
Benchmark S&P Pan Arab Shariah Index (TR)
Inception Date June 30, 2007G
Investment Objective and Policies To provide long-term capital growth by investing in Arabian equity markets, in accordance with Shariah investment guidelines of the Fund Manager’s Shariah Committee. The Jadwa Arab Markets Equity Fund invests in a diversified portfolio of Shariah-compliant equities listed in various Arabian stock markets. It may also invest up to 25% of its assets in other Shariah- compliant equity funds in the region. The Fund offers investors the ability to benefit from the strong potential growth in the region’s capital markets by providing access to a wide range of equity investments. The Fund Manager aims to achieve long-term capital growth with effective management, and a multi-strategy approach. The Fund portfolio is constructed utilizing a bottom-up approach to identify securities that are expected to generate longterm capital appreciation. The Fund Manager utilizes a combination of proprietary company research and third-party research to regularly assess market conditions and the individual securities in order to efficiently manage the Fund. The Fund shall invest not less than 50% of its net assets in equity securities listed on the Arabian stock markets and approved by the Fund’s Shariah committee. During periods of perceived weak performance of equity markets, the Fund Manager may shift up to 50% of the Fund’s assets to short-term Murabaha placements. The Fund shall not invest more than 10% of its net assets in securities of any one issuer. However, where a listed company’s market value exceeds 10% of total market capitalization of the investable universe of all Shariah-compliant listed companies, the Fund Manager is permitted to hold such company’s shares up to the actual higher percentage. The investable universe of Shariah-compliant listed companies shall be reviewed and updated quarterly
Distribution of Income and Gain Policy Dividends and/or income are reinvested in the Fund and not paid out or distributed to investors.
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
3
Fund Manager Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by Capital Market Authority under license number 37-6034 Head Office: P.O.Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571 Fund Custodian Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by Capital Market Authority under license number 37-6034 Head Office: P.O.Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571 The custodian is responsible for taking custody and protecting fund assets on behalf of all unitholders and for taking all required administrative measures in regards to the custody of the fund’s assets.
Fund Auditor KPMG Al Fozan PO BOX 92876 Al Riyadh 11663 Kingdom of Saudi Arabia
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
4
Fund Manager’s Commentary At Jadwa Investment, we are committed to our research-driven, high conviction approach to investing, which we believe can generate above-average risk-adjusted returns for our clients. Our investment strategy is based on long term views founded upon economic, industry sector and company level fundamentals. The year ended 31 December 2016 was a challenging year in capital markets globally characterized by high levels of uncertainty. Risks emanated from all corners of the world. Oil prices collapsed at the start of the year and then more than doubled as global economic activity stabilized, US oil production levels declined and OPEC stepped up to reach supply cut agreements. Arab equity markets were no different, with markets going through bouts of extreme optimism and pessimism over the course of the year. Uncertainty was greatest in Saudi Arabia and Egypt. GCC markets were a microcosm of global uncertainty, none more so than in Saudi Arabia where government measures to rationalize the fiscal burden and reform the economy initially added to economic uncertainty. Given its overall offbenchmark status, international and regional investors shunned Saudi’s capital markets as policy uncertainty gripped local investors. Investors showed preference for on benchmark markets of UAE and Qatar. The two regional markets benefitted from passive and active inflows especially as interesting in market gathered pace over the course of the year. Nonetheless investors returned in full force to Saudi market towards the end of the year as initial negativity was deemed excessive and the outlook for the Saudi economy improved significantly given successful debut international bond issue by the government as well as positive steps taken by the Regulator to enable the inclusion of Saudi market into emerging market equity indices Egypt’s problems were driven by FX markets. Floatation of the currency accompanied by an economic program supported by the International Monetary Fund brought improving capital inflows to the Egyptian market and should lead to the gradual stabilization of the market and the economy. Jadwa Arab Markets Equity Fund had a 9.15% cumulative return for the 12 months ended 30 June, 2017 taking the Fund’s total annualized return since inception on 30 June 2007 to 9.71%. In comparison, the Fund’s benchmark, the Standard & Poor’s Pan Arab Shariah Total Return Index, achieved a total return of 12.76% for the 12 month period ended 30 June, 2017. The benchmark’s total annualized return since the Fund’s inception reached 1.45%.
For more details on performance please refer to the Fund Performance section.
Turnover
1H 2017 Fund
61.23%
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
5
Equity Allocation
% of Net Assets 31-Dec-2016
% of Net Assets 30-Jun-2017
Equity
97.33%
Equity
95.28%
Cash
2.67%
Cash
4.72%
Total
100.00%
Total
100.00%
Sector
% of Net Assets 31-Dec-2016
Sector
% of Net Assets 30-Jun-2017
Materials
18.73%
Materials
20.05%
Banks
14.74%
Banks
15.01%
Food & Beverages
11.91%
Transportation
12.07%
Top 3 Sector Allocations
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
6
Fund Performance
1-Year
3-Year
5-Year
Since Inception
Fund
9.15%
3.53%
77.77%
152.76%
Benchmark
12.76%
-14.31%
25.99%
15.51%
Fund
Benchmark
2007
40.70%
36.67%
2008
-40.49%
-52.42%
2009
29.78%
23.90%
2010
19.53%
14.82%
2011
-2.88%
-5.46%
2012
17.60%
9.04%
2013
42.76%
26.58%
2014
7.95%
-2.28%
2015
2.11%
-14.70%
2016
6.05%
10.80%
1H 2017
2.10%
3.61%
*from Inception June 30, 2007
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
7
Fund Expenses
Expenses for 1H 2017 (SAR) Management Fees
170,096.07
Fund Board
7,438.36
Auditing Fees
9,917.81
Custodian's Fees
10,468.13
Fund Administration Fees
5,234.07
Tadawul Fees CMA Fees
3,719.18
Legal Expenses
-
Cost of Sharia-compliant finance (when required)
-
Registration / Fees of Unit Processing
-
Other expenses
15,372.88
Total
222,246.50
Cost/Average Assets Ratio
0.30%
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
8
Disclosures Material Changes No Material Changes during 1H 2017.
For additional information please refer to the Terms & Conditions available on www.jadwa.com
Kindly refer to Annex A for auditor statements regarding the Fund.
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
9
Annex A: Auditor Statement and Financial Statements
Jadwa Arab Markets Equity Fund Annual Report is available upon request free of charge and on www.jadwa.com
10
Disclaimer: Jadwa Investment or its directors, staff, or affiliates makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in this material. It is not the intention of this material to be used or deemed as an advice, option or for any action that may take place in future. Unless otherwise stated, all information contained in this material shall not be reproduced, in whole or in part, without the specific written permission of Jadwa Investment. The content of this document is for information purposes only. Jadwa Investment does not hold itself out as providing legal, financial or other advice via this document. Investments in Jadwa's products are governed by their Terms and Conditions. Some products are exposed to foreign currencies and changes in currency exchange rates may have an adverse effect on the value and price. The product's value is subject to fluctuations and the investor may not receive the full amount that is originally invested. The information provided in this document may be changed at any time without prior notice. Past performance is not indicative of future returns. Jadwa Investment is authorized and regulated by the Capital Market Authority of Saudi Arabia.
