NCB Capital becomes first saudi manager to launch shariah-compliant UCITS funds platform

NCB Capital, Saudi Arabia’s largest wealth manager, has become the first local institution to establish a non-Saudi registered range of funds under the Undertakings for Collective Investment in Transferable Securities (UCITS) platform registered in Ireland. The firm is also launching the first two funds on this new platform - the NCB Capital Saudi Arabian Equity Fund and the NCB Capital GCC Equity Fund.

The objective of the two funds is to generate long-term capital growth by investing in listed companies in the Saudi Arabian and Gulf Co-operation Council (GCC) markets, in line with Shariah guidelines. NCB Capital will use a mix of strategies covering mid-cap, blue chip, income-generating stocks and a diversified range of selected sectors with solid growth credentials. All strategies will be in line with the UCITS regulations.

These two Shariah-compliant funds will be marketed internationally in conjunction with Amundi, with a focus on institutional investors in Europe and Asia. The firm already manages the world’s largest Shariah compliant family of funds and the world’s largest Shariah compliant fund (US$3.93 billion).

Commenting on the launch of the new funds, Jawdat Al Halabi, CEO of NCB Capital, said, “International investors are increasingly looking for new growth opportunities and nowhere are those better reflected than in the strong companies and sectors that we track in Saudi Arabia and across the Gulf region. With our local knowledge and significant presence we are a natural gateway for international access to a dynamic new market.”

“NCB Capital believes that these new funds will be particularly attractive to investors in Europe and Asia, who have a traditional preference for the regulated structures and strong risk framework that UCITS offers,” added Mr. Al Halabi. “Beyond that, Saudi Arabia and the GCC have compelling growth stories with the former enjoying real GDP expansion of 6.8% in 2011, making it a top 20 global economy. We believe that investors will consider these funds as helpful routes to portfolio diversification.”

The Saudi Equity Market, with a market capitalisation of US$368 billion, has shown strong performance and is by far the largest in the region, accounting for 50% of the GCC equity market and 90% of its trading turnover. Overall, the GCC’s combined market capitalization of US$736 billion itself is roughly equal to 20% of the so-called BRIC markets, a fact that is increasingly being recognised by international money managers.

Summing up, Mr Al Halabi said, “We believe that the combination of strong and continuing equity and sector track records with good local and regional growth prospects will resonate with investors’ desire to diversify their portfolios outside of the usual emerging markets. These funds, and those that follow, are structured to meet this growing demand.”