Emirates NBD Asset Management Newsletter

Emirates NBD
Asset Management
Newsletter
Cover picture: ©iStockphoto.com/InkkStudios
Quarter 4 - 2011
Contents
> Letter to investors
page 1
> Market performance
page 2
> Investment ideas for volatile markets
page 3
> MENA markets - defensive
page 4
> Emirates NBD fund performance
pages 5 & 6
> Emirates Islamic Alternative Strategies Fund
page 7
> Equity manager of the year award
page 8
> Product performance
page 9
Dear investor
As world governments and central banks continue to be pushed by markets towards rapid policy
responses, the pace and frequency of market gyrations seems to be approaching a frenetic speed.
This has meant that many investors have struggled to keep up with changing market views.
The third quarter of 2011 brought unprecedented volatility to
world markets. Using the S&P 500 as an example, the third quarter
saw 19 trading days where the index moved more than 2% in a
single day. This represents almost 30% of the trading days in the
quarter. Many investors, driven by concerns about government
debt in Europe as well as fears of a global slowdown, rushed into
safe haven investments such as US treasuries. Although an
investment in treasuries may provide some respite from the storm,
a ten year yield of 1.9% is unlikely to provide investors with the
long term returns they require to fund their needs.
The world equity markets declined 17% as gauged by the MSCI
World index. Emerging markets fared worse with an overall drop
of 22% as many investors lowered their estimates for future
growth due to a slowdown in the developed world. Despite the
gloomy outlook, there were some bright spots in the quarter.
Among investments that had a positive third quarter were gold
which rallied 8%, as well as our Emirates MENA Fixed Income
Fund, which notched a gain of 0.5% for the 3 month period.
Our Emirates Islamic Money Market Fund also continues its solid
performance with a gain of 0.2% for the quarter, bringing its
year to date gain to 1.3%.
It is worth highlighting that MENA equity markets performed
quite well in the quarter when compared with global equity
markets. Many regional companies are starting to look
attractive relative to their international peers based on
valuations, dividend yields, and future growth prospects. In
addition, the prospect of an MSCI upgrade to emerging
markets status is a potential catalyst for the UAE and Qatar
markets in the fourth quarter.
As promised in our previous Newsletter, we have been working
hard to bring you new investment opportunities. One of the
profiled ideas that is featured in this Newsletter is the re-launched
Emirates Islamic Alternative Strategies Fund. Also included in this
Newsletter is a topical article about investment ideas for today’s
volatile markets. I trust that these articles will provide you with
some new investing insights. While it may be difficult to cope
with market volatility, the current period creates significant
opportunities for investors who are willing to look beyond the
short term horizon.
As we are in the final quarter of the year, our investment teams
continue to work diligently to deliver superior returns for
investors.
Regards
Deon Vernooy
Head of Emirates NBD Asset Management
Frederic de Melker
Head of Priority Banking
For access to our quarterly newsletter or fact sheets for the
investment products, please follow the link indicated here:
http://www.emiratesnbd.com/assetmanagement
You are welcome to contact
Emirates NBD Asset Management on:
Tel: 04 370 0022
Fax: 04 370 0035
Email: [email protected]
Emirates NBD Asset Management Limited (“Emirates NBD AM”) is regulated by the Dubai Financial Services Authority (“DFSA”) and is licensed
to distribute and market investment products to Professional Clients only (as defined in the DFSA’s Conduct of Business Rulebook clause 2.3.2)
Newsletter Q4 2011 > Page 1
Helen Holmes
Fund Manager
Market performance
Doom, Gloom… Boom?
Marc Faber is a contrarian investor who has long been bearish about the
US economy. Nicknamed “Doctor Doom”, he is best known for his Gloom
Boom & Doom Report, a financial publication that outlines investment
opportunities that exist on Horace’s guiding philosophy that ‘many shall
be restored that are now fallen and many shall fall that are now in honour.’
At the risk of using his wisely selected words, albeit in a different order,
we report on this quarter’s gloomy markets, data and events that could be
the doom of the anticipated euphoric boom.
Global manufacturing data in the first week of July set off a tumultuous
start to the 3rd quarter as it continued the weak trend of the past few
months which dampened the excitement over the Greek Parliamentary
acceptance of a second round of austerity cuts at the end of June. The
positive momentum that built up in the run up to the EU Summit in the 2nd
half of the month, where the Greek bailout, worth “up to €159b”,
combined with expanded powers for the European Stability Fund (EFSF)
was short-lived as Italian and Spanish markets fell under the pressure that
their own debt burdens may prove too heavy. July saw investors taking very
much the “risk-off” approach to their investment profiles as global equity
markets were sold off and US Treasuries reprieved their safe-haven status
despite the threat of a potential US default at the beginning of August, as
the politicians in the US could not agree on extending their own debt
ceiling which risked the Government running out of funds. Poor GDP data
on the final day of July also then surprised sharply on the downside
revealing a gloomier economic picture than had previously been feared.
Index / Market
Value at
30.09.2011
3 Mths
%
6 Mths
%
1 Yr
%
5,128.48
10,913.38
1,131.42
8,700.29
5,502.02
643.52
631.87
880.43
78.36
1,104.06
1,431.71
2,533.41
1,991.60
1,165.75
4,137.35
23,644.19
8,393.92
5,833.10
5,602.29
6,112.37
-13.74
-12.09
-14.33
-11.37
-25.41
-12.68
-7.69
-23.19
-16.80
-17.06
-5.62
-6.32
-4.87
-11.67
-23.00
0.14
0.39
-6.09
-5.31
-7.05
-13.78
-11.64
-14.82
-10.39
-22.04
-15.29
-9.11
-24.07
-18.71
-17.36
-7.21
-3.78
-8.28
-18.64
-24.51
-7.81
0.08
-7.33
-10.01
-6.86
-7.57
1.16
-0.86
-7.14
-11.67
-19.50
-9.57
-18.14
-12.94
-6.37
-14.97
-5.23
-13.65
-19.31
-37.64
-4.17
9.08
-16.49
-13.45
-4.38
FIXED INCOME
2 Year US Treasury Yield
10 Year US Treasury Yield
10 Year UK Gilt Yield
JPMorgan Global Govt Bond Index
BarCap Global Emerging Mkt Yield
BarCap Inv Grade Yield
BarCap Global High Yield
0.24
1.92
2.43
518.50
6.54
4.29
9.65
-46.90
-39.39
-28.11
3.06
17.84
12.60
30.41
-68.91
-44.24
-33.75
6.69
13.74
4.63
34.40
CURRENCY
USD Per GBP
USD Per Euro
Yen Per USD
1.558
1.339
77.06
-2.92
-7.69
-4.34
1,624.0
106.3
591.0
8.24
-4.60
-11.64
EQUITY INDICES
FTSE 100
Dow Jones
S&P 500
Nikkei 225
Dax
MSCI India
MSCI Arabian Markets
MSCI Emerging Markets
MSCI Europe
MSCI World
Dubai
Abu Dhabi
Jordan
Bahrain
Egypt
Morocco
Qatar
Kuwait
Oman
Saudi Arabia
COMMODITIES
Gold Spot
Brent Crude
S&P GSCI Commodity Index
The downtrend continued into August where risk assets once again did not
fare well at all. Global equities closed the month 7.3% lower, whilst the
perceived “safe-haven” assets such as US Treasuries and gold recorded
further gains. Having left it to the 11th hour, the extension of the US debt
ceiling eventually came through at the beginning of the month, and
subsequently the S&P credit rating agency downgraded the US sovereign
rating from AAA to AA+. This combined with the continued barrage of poor
macro-economic data, resulted in the high-risk markets being sold of heavily,
although there was a degree of damage control done in the build up to and
the aftermath of the US Federal Reserve conference at Jackson Hole
remembered fondly for the launching of the second round of quantitative
easing in 2010. Very little came out of the conference this time, apart from
vague suggestions that the Fed still had various policy tools hidden up their
sleeves should they be required. Given that macroeconomic leading
indicators did not look healthy, corporate earnings revisions’ had turned
negative and that Greece remains poised on the point of implosion, volatility
remained high, and positive returns for 2011 appeared to be doomed.
Three main recurring concerns drove the market lower in the final month
of the quarter: escalating problems in the Eurozone, slowing economic
global data and data out of China raising the likelihood of a potentially
very hard landing. The Eurozone was the main driver of the weakness with
investors becoming increasingly worried about a Greek default and what
impact this would have on European banks and the borrowing costs for
other struggling Eurozone countries such as Spain and Italy. Global
economic data continued to disappoint with PMI
numbers showing deterioration, and unemployment
3 Yrs
5 Yrs
%
%
(particularly in the US) remaining high. Counterintuitively the USD strengthened significantly with
the concerns over the US debt impasse and
4.61
-13.96
further high-profile rating downgrades; however
0.58
-6.56
-3.00
-15.30
the risk aversion in the markets drove investors to
-22.73
-46.05
seek out fairly valued traditional safety nets.
-5.64
-8.37
Emerging market and commodity related
26.47
28.35
currencies were the worst affected by the sell-off.
-31.17
-38.94
The MSCI World index fell by almost 9% in
11.88
13.14
September as emerging market equities,
-12.44
-34.32
commodities and even gold and silver which were
-6.63
-19.61
-65.31
-70.29
previously safe havens were sold off. Treasuries
-35.97
-28.52
were the beneficiary of the uncertainty, despite
-51.03
-39.27
the ratings agency concerns, with yields dropping
-52.66
-47.83
to record lows.
-41.39
-7.40
-9.88
-54.57
-34.04
-18.05
-35.80
28.21
11.64
-42.66
2.87
-46.43
-42.44
-23.68
-17.63
5.16
24.57
-2.05
22.31
-87.60
-49.90
-45.38
27.41
-23.15
-47.62
-27.22
-94.81
-58.61
-46.27
46.47
6.86
-19.51
24.68
-3.04
-5.24
-7.03
-0.84
-1.81
-7.75
-12.47
-5.00
-27.38
-16.76
5.63
-34.79
14.12
-8.65
-16.90
24.12
28.93
8.23
86.46
9.00
-5.02
171.43
73.15
38.07
The downward trajectory in macro data remains a
concern for the markets as they search for a
glimmer of good news to tide them over while
politicians the world over try to resolve internal
economic issues. The lack of resolution of the
Eurozone sovereign debt crisis continues to be the
cause the main concern the world over, as the
longer the delay, the more inevitable a double-dip
as delay breeds further economic deterioration.
Having been so oversold in the past 3 months, a
small sample of good news injected into the
markets could project them sharply higher in a
display of sheer willingness to evade a bear
market and get the world economy back on track.
Unfortunately, considering the state of the
economic environment, the “boom days” are still
very far off, and perhaps the only “boom” we
experience in the short-term is the sound a bomb
makes when it goes off.
http://new.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=1000
Data source: Bloomberg
Newsletter Q4 2011 > Page 2
Sean Daykin
Senior Fund Manager
Investment ideas for
volatile markets
September is historically a very difficult month for stocks. The Stock Trader’s almanac refers to
September as the month when “leaves and stocks tend to fall; on Wall Street it’s the worst month of
all”. Certainly judging by the performance of global stock markets during August and thus far in
September, the trend for poor performance seems to be continuing.
As Mark Twain once said, “history doesn’t repeat itself, but it does
rhyme” and many investors get the strange feeling that we are
repeating the terrible credit crunch of 2008.
Of course the credit crunch of 2008 was primarily caused by subprime losses and made much worse by the bankruptcy of Lehman
Brothers while this crisis is much more about sovereign debts and
the fiscal problems in Europe and the US.
However, the effects have so far been similar with the global
economy beginning to slow and increasing concerns over banks
and their liquidity and solvency.
Unfortunately, this time around, Central Banks and Governments
are less able to provide the boosts that previously helped the
recovery get back on its feet as they did in 2009. Interest rates
around the world in Developed markets remain at or close to zero
and Governments are constrained by the fiscal positions from
increasing spending.
On the plus side, companies remain in good shape however there
appears to be a lack of confidence which is preventing a hiring surge.
So in this uncertain environment what can investor do?
We believe that, despite the uncertainty, declines in many asset
prices have created some decent opportunities for investors who
are willing to take on some risk. Specifically;
> High dividend stocks. With the declines in equity prices many
companies now offer dividend yields that are significant with
several in excess of 6%, well above the poor yields offered on
US, German or UK Government bonds; GlaxoSmithKline (6.2%),
AT&T (6.1%) and AstraZeneca (6%) being just a few examples.
The high yield at least offers investors some cushion from further
equity declines.
> Emerging market bonds. Many emerging markets now have
much better fiscal situations than the developed markets and
are more likely to be upgraded by rating agencies than
downgraded. For example, Qatar or Abu Dhabi Sovereign bonds
offer significantly higher yields than “safe” US Treasuries but
have the same credit rating.
> High Yield bonds. As stated previously corporate balance
sheets are quite strong and the risk of default is reasonably low.
High yield bonds now offer yields of around 7%.
In summary, the economic situation remains difficult and
the outlook murky however we believe that there are still
some good opportunities for investors (with some risk
appetite) to find assets with potentially decent returns.
Newsletter Q4 2011 > Page 3
Yong Wei Lee
Senior Fund Manager
MENA Markets –
defensive over the quarter
The third quarter of 2011 has been plagued with tumultuous movements in equity markets with the
MSCI Emerging Markets and World Equity indices falling by 22% and 17% respectively over the
quarter. Fears of a possible recession in the US and Europe, US credit rating downgrade by S&P as well
as sovereign credit risks in Europe were foremost on investors’ minds that culminated in a panic sell
off in global equity markets. While MENA equity markets were not spared the malice in global markets,
the impact was far more muted with the S&P Pan Arab index declining by just 8% over the quarter.
Egypt and Saudi Arabia declined the most for the quarter, down 23% and 7% respectively while
Qatar and Morocco proved more defensive, holding flat over the period.
It would seem counter-intuitive for a region that is dependent on
oil revenues to hold up so well in light of the global economic
concerns. We’ve examined several possible reasons behind this
and have highlighted them below.
1. The MENA region has been trading at low valuations relative
to its global peers. The occurrence of ‘Arab Spring’ earlier
this year held back performance of the regional markets while
oil prices and global markets continued to perform well. For
example, for the first half of the year, the S&P Pan Arab Index
was down by 7% while both the oil price and the MSCI
World Index were up by 4%. This has resulted in the region
currently trading at only 9x 2011 PER compared to 11x for
the MSCI World.
In addition, significant de-leveraging of corporate balance sheets
and business restructuring post the financial crisis in 2008 held
back the performance of regional markets in comparison to its
peers. Since the lowest point of 2009, the S&P Pan Arab Index
has appreciated by 29%. In comparison, the MSCI Emerging
Markets and World Indices are currently still 88% and 56%
higher than the lows of 2009. Hence, in an environment where
there is uncertainty over future growth, these markets are
experiencing significant weakness, having achieved strong gains
in the last 2 years.
2. High oil price levels continue to support government
spending. In recent months, GCC governments have placed
greater emphasis on alleviating social concerns such as
employment and housing through increased investment into
infrastructure and job creation. One such country being Saudi
Arabia, which recently announced a social expenditure
programme worth $130bn to be spent over the next few
years. This is well affordable for a country that has amassed
forex reserves of $500bn, about the size of its GDP.
We estimate that the breakeven oil price for GCC fiscal budgets
is $90/b. The average oil price for this year is $107/b, suggesting
that despite the increased spending, the GCC economies are
likely to report a fiscal surplus in their aggregate budget for 2011.
Even if the oil price was to fall below $90/b momentarily, the
huge fiscal reserves accumulated should help sustain investments
towards key initiatives.
3. Macro growth remains relatively robust for GCC. In recent
months, many economists have downgraded the growth
expectations for developed markets. The IMF now expects GDP
growth for developed economies to expand by 1.6% for 2011,
down from 2.4% previously. In comparison, the GDP growth
for MENA has been lowered marginally to 4.0% from 4.1%.
At the corporate level, earnings growth of 15% year-on-year
for 1H11 supports the view that companies are continuing to
report healthy growth in excess of macro level growth.
Conclusion
With the exception of Egypt, where political uncertainty has taken center stage and is affecting investor
sentiment, macro fundamentals for GCC continue to remain supportive of economic growth despite the
turmoil affecting developed economies. The key risk lies in a sharp and sustained decline in oil price. However,
it is worth highlighting that OPEC, where GCC countries hold majority membership, has a global oil production
market share of about 30%. If global oil demand declines due to weakness in the global economy, OPEC is
very likely to act swiftly to reduce supply in order to keep oil prices from declining too sharply.
With this in mind, we remain cautiously optimistic on regional equities. In recent weeks, many attractive
investment opportunities have surfaced prominently. These represent companies that have reported
consistent growth in profits, with good earnings visibility, strong balance sheets and pay an attractive
dividend. We continue to seek out such investments for our MENA portfolios. We believe that investing
into robust companies at attractive valuations will yield promising returns over the medium to long term.
Newsletter Q4 2011 > Page 4
Scott Samuel
Performance analyst
Product performance
Emirates Real Estate Fund
Objective: The Emirates Real Estate Fund is a Shari'a compliant investment that aims to achieve high-yielding rental income
and medium to long term capital growth by investing in a diversified portfolio of residential and commercial properties. The
Fund will focus predominantly on real property assets throughout the UAE, whilst retaining the flexibility to invest in markets
outside of the UAE.
Aug-11
Apr-11
Dec-10
Aug-10
Apr-10
102
101
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Benchmark
Fund
110
105
100
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
95
Performance: The Emirates Global Sukuk Fund fell by 0.6% in the 3 months ended September 2011. Since inception the
Fund’s return is 8.0% with a volatility of 3.3% (annualized). The Fund launch was 21 April 2010.
Benchmark
Fund
Emirates MENA Fixed Income Fund
115
Objective: The Emirates MENA Fixed Income Fund is a US Dollar denominated open ended fund, which aims to achieve a
high level of income as well as capital growth, predominantly through a diversified portfolio of MENA debt securities of
varying maturities along with cash and other ancillary instruments, such as Wakala. The Fund may also take on exposure
to issuers outside the MENA region provided a significant part of their business activity is derived from the region. The Fund
may take exposure to non-MENA securities up to a limit of 20%.
110
105
100
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
95
Benchmark
Fund
Emirates Islamic Global Balanced Fund
120
Objective: The primary investment objective of the Emirates Islamic Global Balanced Fund is to achieve medium to long term
capital growth while minimising risk through diversification across asset classes. The Emirates Islamic Global Balanced Fund
will invest in a diversified portfolio of collective investment schemes and direct investments, including but not limited to,
investments in Murabaha, Sukuk, Real Estate and Equity.
110
100
90
Aug-11
Apr-11
Dec-10
Aug-10
Apr-10
Dec-09
Aug-09
Apr-09
Aug-11
Apr-11
Dec-10
Aug-10
Apr-10
Dec-09
Aug-09
Benchmark
Apr-09
Dec-08
Aug-08
Apr-08
Dec-07
Aug-07
Apr-07
Dec-06
Aug-06
Apr-06
Fund
Dec-08
Benchmark
Fund
150
130
110
90
70
50
30
Aug-08
Apr-08
Dec-07
Aug-07
Apr-07
Dec-06
Aug-06
Apr-06
80
Performance: The Islamic Global Balanced Fund fell by 9.7% over the 3 months ending 30 September 2011. The Fund
managed to outperform the benchmark by 3.0% over this same period. The fund’s volatility of 7.7% remains well below
the benchmark’s volatility of 9.5%.
Performance: The MENA Opportunities Fund returned -4.8% for the third quarter while its benchmark index return was 4.1%. This performance results in a total return of -11.8% (vs -20.3% for the benchmark) since the fund’s inception at the
end of April 2006. The annualised return (2.3%) remains well ahead of the benchmark’s annualised return of -4.0%. The
Fund has been able to outperform the benchmark over the long term while also maintaining a similar volatility level to the
benchmark, 14.9% versus 14.5%.
Dec-09
100
Objective: The objective of the Fund is to provide investors with a professionally managed means of participating in Shari’a
compliant growth investments across a range of MENA markets. The Fund aims to achieve long-term capital growth from
a diversified portfolio of Shari’a compliant equity securities, although it can take on exposure to other assets from time to
time if the Investment Manager believes it would be appropriate to do so. These assets include, but are not limited to,
Murabaha and fixed deposits, Sukuk, trade finance, real estate, alternative strategies and cash equivalent assets.
Apr-09
Performance: The Emirates Islamic Money Market Fund rose by 0.2% for the 3 months ended September 2011. This
compares with a benchmark (3 Month Libor + 0.5%) of 0.19%. The Fund launch was 14 April 2010. Since this inception
period, the fund has returned 2.3% on an annualized basis.
Emirates MENA Opportunities Fund
Aug-09
103
Performance: The Emirates MENA Fixed Income Fund rose by 0.5% in the 3 months ended September 2011. This compares
with a benchmark (HSBC Middle East Total Return Index, weighted with 5% cash) that was up 1.1%. Since Fund launch
on 10 March 2010 the Fund is up 12.0% with a volatility of 4.6%.
Dec-08
104
Objective: The Emirates Islamic Money Market Fund is a Shari’a compliant investment that aims to achieve a higher profit
return than traditional Shari’a compliant bank deposits of similar liquidity. The Fund will primarily invest in diversified
portfolio of Shari’a compliant money market instruments including collectives investing in such instruments.
Objective: The Emirates Global Sukuk Fund is a US Dollar denominated, Shari’a compliant open ended fund that will invest
in a diversified portfolio of Sukuk issues by companies locally and globally. The primary investment objective of the Fund
is to achieve high income as well as capital growth. Certain share classes of the Fund will make income as well as capital
growth. Certain share classes of the Fund will make income distributions on a semi-annual basis, derived from income
generated by the underlying sukuk or maturity proceeds of sukuk.
Aug-08
Fund
Emirates Islamic Money Market Fund
Emirates Global Sukuk Fund
Apr-08
Dec-07
Aug-07
Apr-07
Dec-06
Aug-06
Performance: Since its launch in mid 2005, the Emirates Real Estate Fund has returned a total -15.0% which equates to a
compounded annual growth rate of -2.6%. The Real Estate Fund has been temporarily suspended for dealing in and out
of the fund so returns stated here are as of the latest available price date of 30 June 2011.
Apr-06
Dec-05
160
140
120
100
80
60
40
MSCI Arabian Mkts
Source: FactSet Systems, USD, Bid to Bid, periods as stated.
Newsletter Q4 2011 > Page 5
Scott Samuel
Performance analyst
Product performance
Emirates Islamic Alternative Strategies Fund
110
Objective: The Fund is seeking to generate positive absolute returns through all market cycles by investing in Shari’a
compliant investment vehicles employing investment strategies that, in the opinion of the Manager, offer the prospect of
high risk-adjusted returns. The Fund will aim to generate returns that are independent of wider market movements and
therefore will aim to provide protection from volatility normally associated with investment in traditional securities markets.
100
90
80
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
80
60
Aug-11
Apr-11
Dec-10
Aug-10
Apr-10
Dec-09
Aug-09
MSCI Arabian Mkts
Sep-11
Jul-11
May-11
Mar-11
Nov-10
Jan-11
Sep-10
Jul-10
May-10
Mar-10
120
Nov-09
140
Objective: The portfolio may invest globally through collective investment schemes in a range of asset classes including
cash/near cash, fixed income, equity, property and alternative strategy funds, with the aim of providing long-term capital
growth. The portfolio restrictions and investment strategies that will be followed are such as to characterise this portfolio
as medium high risk.
Jan-10
Emirates Active Managed Portfolio
Sep-09
Jul-09
May-09
Mar-09
Jan-09
Fund
Apr-09
Benchmark
Fund
150
140
130
120
110
100
90
Dec-08
Aug-08
Apr-08
40
Performance: The inception date of the MENA High Income Fund was 20 January 2009. Over the third quarter, the Fund
has produced a total return of -3.8% versus a benchmark return of -5.4%. Since inception, the Fund’s return is 35.3% versus
a benchmark return of 27.2%. The out performance of the fund has been generated with lower levels of volatility. The
Fund’s volatility is at 15.3% versus 16.8% for the benchmark.
Benchmark
100
80
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
Feb-08
Nov-07
Aug-07
May-07
Feb-07
Nov-06
Aug-06
May-06
Feb-06
Nov-05
60
Performance: The Emirates Active Managed Portfolio fell by 10.1% in the third quarter while the composite benchmark
was down 13.6% over the same period. The Fund manager tenure began in March 2008. Fund performance since the
current manager’s inception is -15.2%. This compares to a benchmark return of -18.3%.
Fund
Emirates Balanced Managed Portfolio
140
Objective: The portfolio may invest globally through collective investment schemes in a range of asset classes including
cash/near cash, fixed income, equity, property and alternative strategy funds, with the aim of providing long-term capital
growth through a balanced investment strategy. The portfolio restrictions and investment strategies that will be followed
are such as to characterise this portfolio as medium risk.
100
Benchmark
120
80
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
Feb-08
Nov-07
Aug-07
May-07
Feb-07
Nov-06
Aug-06
May-06
Feb-06
Nov-05
60
Performance: The Emirates Balanced Managed portfolio fell by 7.4% for the quarter ending 30 September 2011. The
composite benchmark had a return of -9.5% over the same period. The Fund manager tenure began in March 2008. Fund
performance since the current manager’s inception is -11.3%. This compares to a benchmark return of -12.4%.
Fund
Emirates Conservative Managed Portfolio:
140
Objective: The portfolio may invest globally through collective investment schemes in a range of asset classes including
cash/near cash, fixed income, equity, property and alternative strategy funds. The portfolio aims to provide long-term
capital growth through price appreciation through investments in collective investment schemes investing in securities and
instruments in markets worldwide. The portfolio restrictions and investment strategies that will be followed are such as to
characterise this portfolio as low to medium risk.
100
Benchmark
120
80
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
Feb-08
Nov-07
Aug-07
May-07
Feb-07
Nov-06
Aug-06
May-06
Feb-06
Nov-05
Performance: The Emirates Conservative Managed Portfolio fell 2.8% over the quarter ending 30 September 2011, while
the composite benchmark return was down 4.1% over the same period. The Fund manager tenure began in March 2008.
Fund performance since the current manager’s inception is 5.8%. This compares to a benchmark return of 12.2%.
May-08
120
100
Dec-07
Objective: The Emirates MENA High Income Fund is an open ended fund which aims to provide a high level of income from
a managed portfolio of MENA assets. The fund will invest primarily in equities, but also take exposure to other suitable asset
classes such as fixed income instruments, deposits and ancillary assets. Income will be distributed on a semi-annual basis
with a target rate of USD 3 month LIBOR plus 300 to 500 basis points. Additionally, through its mix of underlying
investments, the fund offers potential for capital growth.
Jan-08
140
Performance: Over the third quarter, Emirates MENA Top Companies has produced a total return of -5.0%,
outperforming its benchmark index, which returned -6.1% over the same period. Since inception, the fund outperforms
its benchmark by 10.4%.
Emirates MENA High Income Fund
Benchmark
Fund
Aug-07
Objective: The Emirates MENA Top Companies Fund is a conventional fund that aims to achieve medium to long term
capital growth through investments in a portfolio of GCC and MENA listed equities. The Fund will invest primarily in the
GCC and MENA region, but may also invest in other jurisdictions if suitable investment opportunities arise. The Fund may
also invest in recognised collective investment schemes, and may hold other instruments and deposits in order to preserve
capital value and reduce overall portfolio risk.
Sep-07
Emirates MENA Top Companies Fund
May-07
70
Performance: The Emirates Islamic Alternative Strategies Fund has been re-launched to track the MAN GLG Multi-Strategy
Fund through the existing Islamic wrapper. The historical performance since December 2002 of the MAN GLG Multi-Strategy
Fund is 48.3% compared to 22.1% for the HFRX Global Hedge Fund Index. This was accomplished with volatility levels that
were slightly higher (8.2%) relative to the HFRX Index (6.3%) translating to a higher sharpe ratio (risk adjusted) for the Fund.
Fund
Benchmark
Source: FactSet Systems, USD, Bid to Bid, periods as stated.
Newsletter Q4 2011 > Page 6
Salman Bajwa
Senior Manager
Emirates Islamic Alternative Strategies Fund:
tie up with a member of the Man Group
Emirates NBD Asset Management Limited is collaborating with the world’s largest independent
alternative asset manager, Man Group, to build on the success of the Emirates Islamic Alternative
Strategies Fund, which has outperformed its inception since benchmark nearly four years ago.
The fund will allocate assets to the Man GLG Multi Strategy Fund
which is managed by Man Investments, a member of the MAN
Group. This allocation of assets will take place through the fund’s
existing Shari’a compliant structure. In addition to this, Emirates NBD
Asset Management has waived the fund’s performance fee and
reduced the notice period on redemption to 20 business days
effective from the end of July 2011.
Benefits to investors from this collaboration
The fund is one of the very few Shari’a compliant alternative strategy
products available in the market today. Through this partnership with
Man Group investors will further benefit in the following way:
> The Man GLG Multi Strategy fund offers access to the complete
range of MAN Group products
> As a multi strategy solution, the Man GLG Multi Strategy Fund
actively allocates assets to the most appropriate alterative strategy
solutions
> Investors will be able to share in the performance of the Man GLG
Multi Strategy Fund
> Waiver of the fund’s performance fee reduces the cost to
investors
Publication source: 27 September 2011 – http://www.cpifinancial.net, http://www.bloomberg.com, 28 September 2011 – Gulf News, The National-Business, Khaleej Times, Al Khaleej-Business, Al Bayan-Business, Al Ittihad, Emarat Al Youm
Newsletter Q4 2011 > Page 7
Salman Bajwa
Senior Manager
Emirates NBD Asset Management:
equity manager of the year award
With a strong performance in testing markets, Emirates NBD Asset Management wins the equity
manager of the year award.
Emirates NBD Asset Management, a wholly owned subsidiary of
the major UAE-bank Emirates NBD, has been presented the first
ever Equity Manager of the Year award in Global Investor/isf’s
Middle East awards.
Equity fund managers have had a tough time of it of late. Local
unrest and global financial market volatility means that almost
all GCC stock market indices have fallen this year, so much so
that in the first quarter of 2011, the majority of GCC Equity funds
gave negative returns.
However, for Emirates NBD Asset Management, a focus on high
quality companies has contributed to relative outperformance of
its funds in the year. For example, the Emirates MENA Top
Companies Fund had a one year return of 3.27% compared with
the S&P Pan Arab Index, which provided returns of 0.16%.
Furthermore, in August 2011, Emirates NBD Asset Management
announced high dividend payouts on its funds for the first half
of 2011. The Jersey-domiciled funds, which cover Islamic and
regional debt instruments, as well as a high yielding equitybased product, delivered annualised income distributions of
4.5% to 5%.
Emirates NBD’s equity specific funds comprised of stocks linked
to domestic consumption and business investment in Saudi
Arabia, Qatar and the UAE. They focus on stocks paying high
dividends, high quality companies mispriced by the market, and
low valuation multiples compared to other markets.
While recent economic disruption has affected the performance
of regional equity markets, Emirates NBD Asset Management is
confident that this is just a phase.
For access to our quarterly newsletter or fact
sheets for the investment products, please
follow the link indicated here:
http://www.emiratesnbd.com/assetmanagement
The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. These
opinions are not intended to serve as authoritative investment advice and should not be used in substitution for the exercise of own judgement. This information, including any expression of opinion, has been obtained from or is based upon
sources believed to be reliable, and is believed to be fair and not misleading. Any opinion or estimate contained in this presentation is subject to change without notice. Neither Emirates NBD Group nor any of its directors or employees give
any representation or warranty as to the reliability, accuracy or completeness of the information, nor do they accept any responsibility arising in any way (including by negligence) for errors in, or omissions from the information. For further
details of the investment products available from the Emirates NBD Group please contact your local Emirates NBD/Emirates Islamic Bank Branch. This document is provided for information and illustration purposes only. It does not constitute
a solicitation, recommendation or offer to buy or sell any specific investment product or subscribe to any specific investment management or advisory service. Prospective investors in a Fund must obtain and carefully read the Fund’s most
recent Private Placement Memorandum and Supplement as well as seek separate, independant financial advice if required prior to making an investment in the Fund to assess the suitability, lawfulness and risks involved.
This information is not for distribution to the general public but for intended recipients only and may not be published, circulated, reproduced or distributed in whole or part to any other person without the written consent of Emirates NBD
Asset Management Ltd (“Emirates NBD AM”). Where this presentation relates to a Fund or an investment product licensed to be marketed, it is directed to persons authorized to invest in the Fund / investment product as applicable, and
residing in jurisdictions where the Fund / investment product is authorized for distribution or where no such authorization is required. The Fund / investment product is intended for sophisticated investors only who understand the risks involved
in investing in the Fund / investment product and can withstand any potential loss there from. The Fund / investment product may not be guaranteed and historical performances are not indicative of the future or likely performance and should
not be construed as being indicative of or otherwise used as a proxy for the future or likely performance of the funds / investment products. The value of the investment and the income from it can fall as well as rise as the Funds / investment
products are subject to investment risks, including the possible loss of the principal amount invested. The information contained herein does not have any regard to the specific investment objectives, financial situation or the particular needs
of any person. This information has been distributed by Emirates NBD AM for and on its own behalf . Emirates NBD AM is regulated by the Dubai Financial Services Authority.
Newsletter Q4 2011 > Page 8
Scott Samuel
Performance Analyst
Product performance
Global Fund Range performance summary as at September 2011
Pricing
Product Name
Latest
Price
Description
Prev
Price
Sharia
Type
3
Mths
%
6
Mths
%
1
Year
%
3
Year
%
5
Year
%
Emirates Islamic Money Market
10.33
10.33
1
Islamic Money Mkt
0.21
0.60
2.00
–
–
Templeton Global Fixed Income
24.11
26.21
2
USD Fixed Income
-7.98
-5.97
-2.94
34.02
59.14
Emirates Conservative Managed
1.03
1.05
2
Global Multi Asset
-2.75
-2.91
-3.59
-4.99
-8.40
Close Freehold Income Trust
3.81
3.8
2
Global Property
2.12
3.90
5.63
18.42
34.26
Emirates MENA Fixed Income
•
Risk
Rating
Performance
11.2
11.33
2
MENA Fixed Income
0.47
3.69
5.08
–
–
22.61
23.02
2
USD Fixed Income
-1.65
0.04
-0.66
24.64
–
Emirates Balanced Managed
1.11
1.15
3
Global Multi Asset
-7.35
-7.28
-4.82
2.06
-7.03
Emirates Active Managed
1.08
1.13
3
Global Multi Asset
-10.11
-10.57
-7.69
-1.40
-10.53
Emirates Islamic Global Balanced
9.54
10.05
•
3
Global Multi Asset
-9.66
-9.60
-4.85
-10.69
-8.04
8.5
8.5
•
3
Regional Property
–
-0.82
-14.83
-47.92
-30.56
641.79
654.36
3
Alternative Strategy
-4.14
-4.44
-1.66
-6.49
-5.05
–
–
PIMCO GIS Total Return Bond Fund
Emirates Real Estate Fund*
GAM Diversity Fund
PIMCO Global Investment Grade Credit
12.86
13.14
Emirates Global Sukuk
11.71
11.85
Crescent Global Equity
GAM Worldwide
3
USD Fixed Income
-2.13
-0.69
-0.46
•
3
Global Sukuk
-0.56
2.12
4.52
–
–
•
4
Global Equity
–
–
–
–
–
1908.08 2150.54
4
Global Equity
-22.34
-22.56
-13.83
-12.52
-18.65
Jupiter Income Fund
376.22
383.27
4
Specialist Equity
-11.75
-11.50
-7.57
-1.50
-27.22
Jupiter Financial Opportunities
282.59
308.29
4
Specialist Equity
-21.19
-23.74
-24.85
-0.87
-9.18
Franklin Mutual North America
41.27
44.72
4
Regional Equity
-16.58
-16.31
-5.28
-6.10
-19.68
Schroder European Fund
16.29
17.73
4
Regional Equity
-23.38
-23.34
-15.60
-14.67
-35.05
980 1004.07
GAM Japan
4
Regional Equity
-12.63
-15.14
-7.96
-18.65
-38.87
Schroder Emerging Markets
10.61
12.39
5
Emgng Mkt Equity
-23.00
-24.27
-16.46
17.11
17.76
Templeton Asian Growth
26.67
31.34
5
Emgng Mkt Equity
-20.74
-21.93
-14.22
49.66
57.16
Templeton BRIC
14.35
17.21
5
Emgng Mkt Equity
-26.90
-29.48
-21.93
-2.38
7.17
5
Emgng Mkt Equity
-22.15
-21.77
-19.45
31.89
44.74
5
Emgng Mkt Equity
-17.71
-18.82
-20.33
35.98
56.43
5
Regional Multi Asset
-4.76
-6.50
-5.64
-24.02
-15.18
5
Commodities
–
–
–
–
–
5
Alternative Strategy
-4.24
-6.44
-4.56
-6.60
–
-24.35
–
Schroder Greater China
35.07
41.4
Franklin India Fund
22.26
24.2
8.82
8.99
•
8.6
8.77
•
Emirates MENA Opportunities
Schroder Commodities
Emirates Islamic Alternative Strategies
Emirates MENA Top Companies
7.89
8
5
Regional Equity
-5.01
-5.47
-3.38
Emirates MENA High Income Fund
1.34
1.35
5
Regional Multi Asset
-3.84
-3.70
-3.34
–
–
Schroder ISF Emerging Market Debt AR
25.51
25.82
5
Emgng Mkt Debt
-1.16
-0.70
-2.41
17.67
26.60
Prudential IOF Dragon Peacock Fund
15.82
18.01
5
Emgng Mkt Equity
-22.55
-26.47
-24.35
23.86
–
Schroder ISF Global Energy Fund
28.34
34.43
5
Energy
-28.79
-36.13
-17.06
-13.31
–
6.58
7.63
5
Emgng Mkt Equity
–
–
–
–
–
Emirates Emerging Markets Equity Fund
•
Notes:
1.
Performance in LOC on a Bid-Bid basis, source: Bloomberg
2.
Sharia compliant funds have been approved by the Fatwa and Shari’a Supervisory Board of Emirates Islamic Bank
*
The Emirates Real Estate Fund is temporarily suspended for dealing in and out of the funds. Valuations stated here are the latest available prices. There is expected to be an indicative valuation
for the Emirates Real Estate Fund early in Q4.
Newsletter Q4 2011 > Page 9
Branch contact details
Deira Branch
Baniyas Road,
PO Box 2923 Dubai
Tel: +971 4 225 0077
Fax: +971 4 226 4302
Jumeirah Beach Walk Branch
Dubai Marina,
PO Box 2923 Dubai
Tel: +971 4 427 0353
Fax: +971 4 427 0350
Al Qiyadah Branch
Opposite Al Ahli Club & Lulu Hypermarket
Al Nahda Road, Dubai, UAE
Tel: +971 4 238 8440
Fax: +971 4 250 7957
Al Souk Branch
Al Falah Road,
PO Box 11954 Dubai
Tel: +971 4 309 3490
Fax: +971 4 353 0630
Dubai Mall Branch
Dubai Mall,
PO Box 2923 Dubai
Tel: +971 4 434 4100
Fax: +971 4 434 4133
Sharjah Industrial Branch
PO Box 44470 Sharjah
Tel: +971 6 534 5577
Fax: +971 6 534 6006
Al Maktoum Road Branch
Al Maktoum Road,
PO Box 52088 Dubai
Tel: +971 4 603 6004
Fax: +971 4 227 6987
World Trade Center Branch
Exhibition Hall No 4. Dubai
Tel: +971 4 332 3636
Fax: +971 4 331 0387
Jumeirah Branch
AlWasl Road,
PO Box 11909 Dubai
Tel: +971 4 349 5969
Fax: +971 4 349 5453
Jebel Ali Branch
Near Gate No. 3
PO Box 777 Dubai
Tel: +971 4 8085800
Fax: +971 4 8815545
Green Community Branch
PO Box 2923 Dubai
Tel: +971 4 885 3000
Fax: +971 4 885 3639
Umm Suqeim Branch
Spinneys Centre, Ground Floor,
Dubai
Fax: +971 4 394 0010
Sheikh Zayed Road Branch
Saeed Tower,
Dubai
Tel: +971 4 332 2534
Fax: +971 4 331 4591
Group Head Office Branch
Baniyas Road, Deira,
Dubai
Tel: +971 4 201 2090
Fax +971 4 221 8777
Sharjah Main Branch
King Abdul Aziz Rd, Al Qassimia Area, Sharjah
Tel: +971 6 572 8898
Fax: +971 6 572 8810
Al Taawun Branch
Al Taawun street, Al Taawun 2 Building, Sharjah
Tel: +971 6 545 4666
Abu Dhabi Branch (Najdah)
Najdah Road, PO Box 40355, Abu Dhabi
Tel: +971 2 674 5588
Fax: +971 2 677 1978
Al Muhairy Center Branch
Zayed Street, PO Box 34543 Abu Dhabi
Tel: +971 2 631 9696
Fax: +971 2 631 8040
Abu Dhabi Main Branch
Sheikh Khalifa St, PO Box 110811, Abu Dhabi
Tel: +971 2 627 5554
Fax: +971 2 626 9398
Dubai Festival City Branch
PO Box 2923 Dubai
Tel: +971 4 232 5568
Fax: +971 4 232 5623
Oud Metha Branch
Gulf Residence Building,
Dubai
Tel: +971 4 336 0015
Fax: +971 4 336 6145
Muroor Branch
Al Muroor Street, Abu Dhabi
Tel: +971 2 449 0404
Fax: +971 2 449 4824
Mirdiff Branch
PO Box 2923 Dubai
Tel: +971 4 288 3774
Fax: +971 4 288 4695
Bank Street Branch
BurJuman Centre, Dubai
Tel: +971 4 434 4111
Fax: +971 4 434 4139
Qaryat Al Beri Branch
Qaryat Al Beri Souq, Level 2, Abu Dhabi
Tel: +971 2 558 7227
Fax: +971 2558 1705
Mankhool Road Branch
Nashwan Building, Next to EPPCO
Mankhool Road,
PO Box 2923 Dubai
Tel: +971 4 398 5848
Fax: +971 4 398 6242
Emirates Airline HQ Branch
Airport Road, Dubai
Tel: +971 4 286 4461
Fax: +971 4 286 4322
Tourist Club Branch
Electra St, Tourist Club Area,
PO Box 47676 Abu Dhabi
Tel: +971 2 645 1572
Fax: +971 264 50384
Tower Branch (The Tower)
Sheikh Zayed Road,
PO Box 2923 Dubai
Tel: +971 4 329 0009
Fax: +971 4 332 0990
Al Qusais Branch
Showroom 4,
Almaidoor Complex
PO Box 2923 Dubai
Tel: +971 4 263 8777
Fax: +971 4 261 1813
Burj Al Arab Branch
Umm Suqeim 3, Opposite Burj Al Arab
Parcel ID 366-104, Dubai
Tel: +971 4 348 2112
Fax: +971 4 348 8494
Galleria Branch
Hyatt Regency, Corniche Road, Deira
PO Box 2923 Dubai
Tel: +9714 2738888
Fax: +9714 2722086
Barsha Branch
Plot no. 376-2378,
Near Al Mawakeb School,
Road No. 316 & 23,
PO Box 2923 Dubai
Tel: +971 4 3234455
Fax: +971 4 3234458
Burj Khalifa Residence Branch
Burj Khalifa,
Dubai
Tel: +971 4 432 8622
Fax: +971 4 432 8621
Jumeriah Beach Road Branch
Opposite Marcato Mall, Dubai
Tel: +971 4 340 0020
Fax: +971 4 349 7797
IBN Battuta Branch
IBN Battuta Mall, Andalusia Court,
Dubai
Tel: +971 4 429 7917
Fax: +971 4 368 5501
Satwa Branch
Behind Old Satwa Government Clinic,
Dubai
Tel: +971 4 349 2690
Fax: +971 4 349 9030
Nad Al Shiba Branch
Al Ain Road, Dubai
Tel: +971 4 336 3693
Fax: +971 4 336 3788
Muraqabat Branch
Al Riqqa Street, Near Muraqabat
Police Station
Deira, Dubai
Tel: +971 4 254 6320
Fax: +971 4 254 6594
Al Ain Branch
Sheikh Khalifa Bin Zayed, Street Planning
Roundabout, PO Box 15095 Al Ain
Tel: +971 3 751 0055
Fax: +971 3 751 1300
Fujairah Main Branch
Hamad Bin Abdullah St, PO Box 1472
Fujairah
Tel: +971 9 222 2116
Fax: +971 9 222 2115
Ras Al Khaimah Branch
Al Muntasir Road, Sheikh Omar bin Saqr
Al Qasmi Building, PO Box 12132 Ras Al Khaimah
Tel: +971 7 227 2800
Fax: +971 7 227 3395
Ras Al Khaimah Corniche Branch
Yousef Obaid Al Neaimi Building, Ras Al Khaimah
Tel: +971 7 233 3077
Fax: +971 7 233 4197
Ajman Main Branch
Sheikh Rashid Bin Humaid Street, Ajman
Tel: +971 6 742 4721
Fax: +971 6 742 7479
Mushrif Mall Branch
Unit 264 & 265, 2nd Floor, Mushrif Mall
Airport Road, Abu Dhabi, UAE
Tel: +971 2 673 7585
Fax: +971 5 673 7238