The objective of the Fund is to achieve long term capital growth and income distribution by investing in Shariah compliant companies with sound dividend payout track record and listed on the stock exchanges of the countries in the GCC.
The "AlAhli GCC Growth and Income Fund" is an actively managed only fund that will invest in the six GCC countries to achieve long term capital growth and income distribution. The Fund Manager will employ bottom-up stock selection approach with a thematic overlay. The Fund will rotate between countries, sectors and stocks in order to achieve higher risk adjusted return relative to its benchmark.
The investment strategy is based on:
- Management style: The Fund management will be driven by a blended approach combining bottom-up stock picking based on fundamental research as well as sector and country specific themes with a focus on long term dividend yields.
- Stock selection: The Fund will be managed to include stocks that trades at high current/forecasted dividend yield with sound fundamentals.
- Time Horizon: The Fund Managers will select securities and construct the portfolio for a long term time horizon (5 to 7 years) with less emphasis on short term volatility.
- Diversification: The Fund Manager will ensure diversification of the holdings across countries and sectors. Income generation and conviction in investment theme and stock specific stories have priority over benchmark representation
- Geographic Diversification: The Fund Manager will use his own discretion to diversify the Fund's investments among the following countries*:
- Sector Diversification: The Fund Manager will use his own discretion to diversify the Fund's investments among the following market sectors*:
The pie chart is only meant as an example of one possible geographic allocation strategy. It is not representative of true allocation
The pie chart is only meant as an example of one possible sector allocation strategy. It is not representative of true allocation
A Source of Stability
A company's ability to pay a dividend is often a reflection of its financial strength, stability and quality. As a result of the turbulent market conditions and the environment of uncertainty characterizing the global economy, today, dividend-paying stocks are regaining their allure and investors have a renewed interest in companies that have withstood the market fluctuations and have consistently paid shareholders stable streams of income. This income stability is especially critical during slower growth economic cycle or extended slowdowns.
At NCB Capital we believe that dividend-paying stocks play an increasingly important role in an investment portfolio, and dividend income can offer investors a source of stable returns. We have thus created the "AlAhli GCC Growth and Income Fund" that aims to invest in Shariah compliant GCC companies that have historically demonstrated a sound dividend payout record.
Supported by the global recovery and relatively stable and appreciating oil prices, the outlook for the GCC economies have improved, thus making it a viable investment region. Through qualitative and quantitative analysis of the companies and their respective sectors the Fund manager will strive to provide investors with a steady, consistent investment process to help them grow their assets in improving markets and help protect their assets in uncertain ones.
A Golden Opportunity for Investors while economic activity has picked up since the lows of 2008, many investors are still looking for consistency in their investments. Security selection will be more important than ever and dividend- paying stocks may help investors meet their financial goals.
Dividend-paying stocks offer the following benefits:
- Capital discipline - A commitment to paying a dividend restricts the amount of capital a company has available to reinvest, therefore, encouraging management team to prioritize opportunities and invest efficiently.
- Higher earnings quality - Companies that pay dividends indicate to the market that their earnings are real and long term, giving investors a sense of comfort in the quality of earnings.
- Income growth - Historically, dividend-paying stocks offer an increased income stream and higher growth potential than fixed income investments.
- Current income generation - In today's markets, dividend paying stocks are a compelling option, offering a certain amount of stability over their non-dividend paying counterparts.
- Yield supported returns - When share prices fall, dividend yields rise. The stock would become more attractive to investors who would likely be drawn in by the relatively higher returns, driving the prices back up and causing future payments to grow.
GCC's Solid Economic Grounds
The outlook for the regional equity markets is becoming increasingly optimistic as the economic recovery moves towards consolidation. The GCC region is becoming an ever more attractive region for long term investments as billions of dollars are pumped into the countries respective economies, helping fuel positive and sustainable GDP growth. Appreciating oil prices coupled with positive economic growth, lower than expected inflation, strong corporate earnings and decent valuations should be a recipe for stock price appreciation in 2011. Furthermore, confidence levels are improving and there is positive momentum in the region in terms of spending and consumption, thus making the GCC a geographic location of interest to investors seeking both growth and consistency. As a result of its long presence and history, NCB Capital has a deep knowledge of the GCC regional markets and companies and has the ability to make the best selection of equities for the AlAhli GCC Growth and Income Fund.
The Fund's Opportunities for Investors Seeking Consistency
- High dividend yield companies with a sound payout history are an attractive investment at any time, especially in turbulent times. Unlike capital returns, cash dividends do not require the investor to sell the stock, making these dividends more valuable when market prices are depressed. Capital appreciation potential over time, as bear market conditions recede, adds to the attractiveness of such stocks.
- Market downturn offers investors the opportunity to take positions in stable, dividend-paying stocks at attractive prices and benefit from the subsequent higher dividend yields.
- GCC economic fundamentals remain strong. While oil prices have tumbled from their peaks, they remain high relative to historical levels and are backed by strong demand fundamentals. In addition to hydrocarbon revenues, favorable demographics as well as the diversification of local economies into non-hydrocarbon sectors underpin the positive economic outlook.
- The fund offers an entry opportunity: GCC dividend yields are above their historical average. The steep fall in markets from 2006-2007 highs has lifted GCC dividend yields to around 3.4%.
|Category:||Open-ended; Shariah compliant equity fund|
|Investment instruments:||Equities and Murabaha|
|Fund Term:||Long term|
|Minimum Subscription Amount:||SAR 5,000|
|Semi-Annual Dividends Payout:||Up to 5 business days at end of April and up to 5 business days end of August|
|Subscription Fees:||Maximum 2%|
|Management Fees:||1.85% per annum|
|Valuation Days:||Monday and Wednesday|
|Subscription and Redemption:||Daily (The transaction will be based on the closest valuation date)|
|Redemption Payment Day:||3rd business day in Saudi Arabia after valuation date|
|Benchmark:||S&P GCC Shariah Dividend Index
- GCC Shariah Compliant Companies
- Dividend paying stocks *
- Murabaha transactions
- Stable dividend payment outlook
- High quality earnings and healthy cashflows
- Strong profitability
- Sound balance sheet
- High quality management and consistent strategy
- Structural characteristics
- Company valuation
* The Fund manager may invest up to 10% of the Fund's net asset value in similar Shariah compliant Funds.
For more details about this Fund please refer to the Fund's Terms and Conditions.