MENA Asset Management Survey 2012 - National Bank of Abu Dhabi

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Acknowledgements 

MENA Asset Management Survey 2012 exists with the support of the following 

sponsors: 

Official Research & Data Partner: Lipper, a Thomson Reuters Company 

There were many who were generous with their time and ideas and the project would 

have been poorer without their support. Sincere thanks go to the editorial board: Chirag 

Shah, Columcille O’Donnell, Detlef Glow, Drone Chowdry, Fadi Al Said, Farah 

Foustok, and Stephen Carriere. I would also like to thank Simon Gray, Jonathan Reid 

from the Dubai Financial Services Authority, Manal Ashoor and Fatima Akhtarzadeh 

from the Central Bank of Bahrain. The chapter on regulatory developments owes much 

to the work of the compliance team at National Bank of Abu Dhabi. Yvonne Pohland 

worked on book design and coordinated with contributors. Alp Eke compiled data and 

worked on updating the book. 

Nilgün and Sena Gökkent were patient and supportive as always. 

Gıyas Gökkent 

Abu Dhabi, United Arab Emirates 

January 22 nd , 2013 

3

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Foreword 

Dr. Gıyas Gökkent 

Editor / Author – MENA Asset Management Survey 

Group Chief Economist – National Bank of Abu Dhabi 

Three years after the launch of the first edition, the 

Survey continues to provide a description of the 

regional asset management industry and act as a 

catalyst for its development. 

The 2012 edition expands coverage to more countries in the Middle East and North 

Africa region and provides additional content. Those of you who are familiar with 

previous editions will note that the title has been changed to reflect the Survey’s wider 

scope. An additional aspect of the 2012 edition is the appointment of Lipper, a Thomson 

Reuters company, as the official data partner for the Survey. At the same time, the 

support of a number of official entities across the region continues to be extremely 

invaluable. Indeed, the book is the result of industrywide participation and contains some 

data which are published for the first time. You will, therefore, find data coverage to be 

more comprehensive in this year’s edition. 

I hope you will find this publication useful as the definitive reference source on the 

regional asset management industry. 

I would like to use this opportunity to invite you to participate in the publication and 

provide feedback. 

Contact Information: 

Postal Address: PO Box 4, Abu Dhabi, United Arab Emirates 

Telephone: +9712 4105 140 / 481 

E-mail: giyas.gokkent@nbad.com 

5

Editor / Author 

Gıyas Gökkent’s experience spans insurance, academia, and banking. 

Dr. Gökkent is currently Group Chief Economist at NBAD. He is a 

member of the Advisory Board of the College of Business 

Administration at Abu Dhabi University. He previously acted as co-head 

of Asset Management Group at NBAD. He worked at the Strategic 

Planning Department of Garanti Bank, Turkey as an Economist where 

he served as a member of an advisory body for Volkswagen-Dogus 

Finance. He served as a member of the banking sector advisory body at 

the Association of Turkish Industrialists and Businessmen. He has held 

a number of academic positions in the US, Turkey, and the UAE. He 

had been acting head of the finance department at Abu Dhabi 

University prior to joining NBAD. Gökkent holds a Ph.D. in Economics 

from Florida International University. 

Data Analysis 

Alp Eke is Senior Economist at NBAD Economics Group. Prior to 

joining National Bank of Abu Dhabi, he worked for the Abu Dhabi 

Tourism Authority as a statistician. He has also worked at the UAE 

Ministry of Economy as an expert consultant. Before coming to the 

UAE, he worked as a statistical risk analyst creating risk models for 

insurance companies and banks. He holds a Master of Science in 

Statistics from Iowa State and Master of Science in Economics from 

University of Illinois Urbana-Champaign. 

Marketing and Design 

Yvonne Pohland, born German and UAE based for 8 years, is a 

professional all-rounder. She holds a Medical Degree in Emergency 

Medicine, was working as a Paramedic and First Aid Instructor, served 

the German Police Forces as a Police Officer, became a Flight 

Attendant and inspired others as a team leading Special Education 

Teacher. She believes, that with positive attitude towards life and fellow 

men, combined with hard work, all is possible to achieve. In 2011, 

Yvonne joined the Economics Group at National Bank of Abu Dhabi 

where she continues to follow her vision of success. 

7

© Thomson Reuters 2012. All rights reserved 002847 1212 

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Table of Contents 

Page 

3 Acknowledgements 

5 Foreword 

7 Survey Team 

1. Global Trends 

23 Economic Developments 

26 Global Fund Trends 

29 Fiduciary Assets – Selected Firms 

31 Focus: 2013 Outlook – ING Investment 

Management 

38 Focus: Luxembourg – Emmanuelle Entringer – 

Senior Advisor Investment Funds – Arendt & 

Medernach – Avocats 

2. Middle East & North Africa (MENA) Region 

45 Regional Economic Developments 

47 Industry Overview 

53 Industry Perspective – Farah Foustok - Chief 

Executive Officer - ING Investment Management 

Middle East 

58 Trends by Fund Type 

63 Focus – MENA Fixed Income – Is It All Over ? – 

Mark Watts – Head of Fixed Income - Asset 

Management Group- National Bank of Abu Dhabi 

66 Focus – Fund Management in the Middle East – 

Chirag Shah - Head of Strategy and Corporate 

Development – Dubai International Financial Centre 

Authority 

3. Gulf Cooperation Council (GCC) Region 

73 Regional Economic Developments 

74 Industry Overview 

82 Focus – Yousuf Al Jaida – Director of Strategic 

Development- Asset Management - Qatar Financial 

Centre Authority 


9

91 Industry Perspective – Sudarshan Malpani – 

Managing Director- Sarasin-Alpen & Partners 

Limited 

4. Regulation 

97 Recent Regulatory Developments 

103 Regulatory Perspective – Dr. Ryan Lemand – 

Senior Economic Advisor & Acting Head of Risk 

Management – Securities & Commodities Authority 

108 Industry Perspective – New requirements: The 

Opportunity for Excellence ? - Hazem Elmalla - 

Head of Advent Professional Services MENA – 

Advent Software 

113 Dubai Financial Services Authority (DFSA) Funds 

Regime of the Dubai International Financial Centre 

122 Domicile matrix - DIFC, QFC 

131 Domicile Matrix – Bahrain, Kuwait 

143 Domicile Matrix – Egypt, UAE 

151 Domicile Matrix – Oman, Saudi Arabia 

5. Benchmarks 

161 GCC Overview 

165 Recent Developments 

170 Fund Performance Rankings 

181 Industry Perspective – Amin El Kholy – Managing 

Director- Arqaam Capital 

6. Sharia Compliant Funds 

189 Global Background 

193 Focus – Detlef Glow - Head of EMEA Research & 

Karim Arafa- Islamic Funds Analyst- Lipper 

200 Middle East & North Africa (MENA) Overview 

207 Top MENA Sharia Compliant Funds 

7. Exchange Traded Funds 

211 Global Background 

212 Regional Background 

10

Country Chapters 

8. Bahrain 

217 Economic Developments and Industry Overview 

226 Investor Profile and Distribution 


230 Industry Perspective - Shakeel Sarwar - Head of 

Asset Management - Securities and Investment 

Company (SICO) 

234 Bahrain – Directory 

9. Egypt 



248 Egypt – Directory 

10. Kuwait 



261 Kuwait – Directory 

11. Morocco 

271 Economic Background 

272 Fund Trends 

12. Oman 

275 Economic Background & Industry Overview 

278 Oman - Directory 

13. Qatar 


288 Focus – Recent Developments in Qatar’s Financial 

Services Industry - Yousuf Al Jaida- Director of 

Strategic Development- Asset Management Qatar 

Financial Centre Authority 

290 Fund Trends 

291 Selected Regulated Firms at Qatar Financial Centre 

293 Registered Funds at Qatar Financial Centre 

294 Investment Funds licensed in Qatar 

297 Qatar - Directory 

11

14. Saudi Arabia 



322 Saudi Arabia - Directory 

15. United Arab Emirates 


336 Dubai International Financial Centre 

338 Industry Perspective – Financial Services 

Association UAE 


342 United Arab Emirates - Directory 

12

Index - Charts & Tables 

Chapter 1 – Global Trends 

24 Global Fund Assets 

26 Global Fund Assets by Type 

27 Breakdown of Global Fund Assets by Type 

28 Top Global Asset Management Companies 

29 Fiduciary Assets of Selected Companies 

30 Fiduciary Fee Income of Selected Companies 

30 Fee Income As a Percentage of Assets 

35 Mutual Fund Assets by Country 

36 Number of Funds by Country 

37 Selected Data 

Chapter 2 – Middle East & North Africa Region Trends 

46 Market Performance 

47 Number of Mutual Funds in Dataset 

48 Assets of Domestic Funds, Locally Sponsored 

funds, and of Funds by Geographic Focus 

48 Country Breakdown of Locally Domiciled Mutual 

Funds 

49 Average Assets of Domestic Funds, Locally 

Sponsored funds, and of Funds by Geographic 

Focus 

49 Breakdown of Locally Domiciled Mutual Funds by 

Type 

50 Number of Mutual Funds by Domicile and Type 

50 Assets of Mutual Funds by Type and Domicile 

51 Average Assets of Mutual Funds by Type and 

Domicile 

51 MENA Domiciled Fund Assets 

52 Average Fund Assets by Type 

58 Estimated Fund Flows (MENA Domiciled Funds) in 

2012H1 

59 Estimated Fund Flows (MENA Domiciled Funds) in 

2011 

59 Top 20 MENA Mutual Funds by Assets 

60 Top 20 MENA Equity Funds by Assets 

61 Top 10 MENA Index Funds by Assets 

62 Top 20 MENA Fixed Income Funds by Assets 

65 Top 20 MENA Money Market Funds by Assets 

13

Chapter 3 – Gulf Cooperation Council Region Trends 

74 Mutual Fund Count and Assets – Official Data 

75 Number of Mutual Funds in Dataset 

76 Assets of Domestic Funds, Locally Sponsored 

funds, and of Funds by Geographic Focus 

76 Country Breakdown of Locally Domiciled Mutual 

Funds 

77 Average Assets of Domestic Funds, Locally 

Sponsored funds, and of Funds by Geographic 

Focus 

78 Breakdown of Locally Domiciled Mutual Funds by 

Type 

78 Number of Mutual Funds by Domicile and Type 

79 Assets of Mutual Funds by Type and Domicile 

79 Breakdown of the Number of Mutual Funds by Type 

80 Asset Breakdown of Locally Domiciled Mutual 

Funds by Type 

80 Average Assets of Mutual Funds by Type and 

Domicile 

81 Locally Domiciled Fund Assets by Type 

81 Average Fund Assets by Type 

85 Estimated Fund Flows (GCC Domiciled Funds) in 

2012H1 

85 Estimated Fund Flows (GCC Domiciled Funds) in 

2011 

86 Top 20 GCC Mutual Funds by Assets 

87 Top 20 GCC Equity Funds by Assets 

88 Top GCC Sector Funds by Assets 

88 Top 10 GCC Index Funds by Assets 

89 Top GCC Fixed Income Funds by Assets 

90 Top 20 GCC Money Market Funds by Assets 

Chapter 5 - Benchmarks 

161 Top Benchmarks Used by Funds in the GCC 

162 Selected Benchmarks Used by Equity and Money 

Market Funds in the GCC (by fund assets) 

163 Selected Equity Benchmarks Used by Funds in the 

UAE and Saudi Arabia (by fund assets) 

164 Selected Benchmarks Used by Equity Funds in 

Kuwait and Bahrain 

164 Selected Benchmarks Used by Shariah Compliant 

Equity Funds in the GCC 

170 Selected Benchmarks 

171 Performance of Conventional Funds Tracking TASI 

14

171 Performance of Shariah Compliant Funds Tracking 

S&P GCC Composite Shariah Index 

172 Performance of Conventional Funds Tracking S&P 

GCC Composite Index 

172 Performance of Conventional Funds Tracking S&P 

Pan Arab Composite Index 


S&P Saudi Arabia Shariah Index 

174 Performance of Conventional Funds Tracking 

Various Types of S&P GCC Indices 


Various Types of S&P Pan Arab Indices 


SAIBOR 


SAIBOR 


USD LIBOR 

178 Performance of Conventional Funds Tracking USD 

LIBOR 

179 Performance of Selected Fixed income Funds 

Chapter 6 – Sharia Compliant Funds 

189 Breakdown of Sharia Compliant Fund Assets by 

Region 

190 Breakdown of Sharia Compliant Fund Assets by 

Country 

191 Number of Sharia Compliant Funds by Type and 

Domicile 

191 Sharia Compliant Fund Assets by Type and 

Domicile 

192 Top 5 Sharia Compliant Mutual Funds in the World 

by Assets 

193 New Fund Launches 

194 Global Sukuk Issuance 

194 Market Share by Sales Registration 

195 Estimated Net Flows 

196 Breakdown of Flows by Type 

197 Breakdown of Flows in the GCC by Country 

200 Number of Sharia Compliant Mutual Funds 

201 Sharia Compliant Mutual Fund Assets 

202 Average Mutual Fund Assets 

203 Types of Sharia Compliant Mutual Funds by 

Domicile 

15

203 Assets of GCC Mutual Funds by Type and Domicile 

204 Average Assets of GCC Mutual Funds by Type and 

Domicile 

204 Share of Sharia Compliant Funds in GCC Member 

States 

205 Breakdown of Sharia Compliant Funds by Country 

206 Estimated Fund Flows in 2012H1 

206 Estimated Fund Flows in 2011 

206 Top 10 MENA Sharia Compliant Mutual Funds by 

Assets 

207 Top 10 MENA Sharia Compliant Equity Funds by 


207 Top MENA Sukuk Funds by Assets 

208 Top MENA Sharia Compliant Money Market Funds 


Chapter 7 – Exchange Traded Funds 

211 Global ETF Breakdown by Region 

214 MENA Focused Exchange Traded Funds 

Chapter 8 - Bahrain 

219 Top Fund Sponsors by Number of Locally 

Incorporated Funds 

220 Number of Mutual Funds 

220 Mutual Fund Assets by Domicile and Assets of 

Local Sharia Compliant Funds 

221 Assets of Funds 

222 Average Assets of Funds 

222 Growth Rate Of Fund Assets 

223 Growth Rate of Local and Sharia Compliant Fund 


224 Number of New Funds 

224 Number of New Locally Incorporated Funds 

225 Breakdown of the Number of Locally Incorporated 

Funds by Type 

226 Fund Assets by Investor Type 

226 Fund Assets by Distributor 



228 Top 10 Bahrain Domiciled Mutual Funds by Assets 

228 Top 10 Bahrain Domiciled Equity Funds by Assets 

229 Top Bahrain Domiciled Fixed Income Funds by 


16

Chapter 9 – Egypt 

242 Assets and Numbers of Locally Incorporated Funds 

243 Top Fund Management Companies 

243 Top Fund Sponsor Companies 

244 Breakdown of Domestic Funds by Type 

244 Shariah versus Conventional Funds Breakdown 



246 Top 10 Egypt Domiciled Mutual Funds by Assets 

246 Top 10 Equity Domiciled Equity Funds by Assets 

247 Top 10 Egypt Domiciled money Market Funds by 


Chapter 10 - Kuwait 

254 Number and Assets of Domestic and Foreign 

Funds 

255 Fund Operators, Breakdown by Fund Type 

256 Fund Assets by Operator and Type 

257 Breakdown of Fund Assets by Type 

257 Fund Assets by Type 2005-2012Q2 


258 Top 10 Kuwait Mutual Funds by Assets 


259 Top 10 Kuwait Equity Funds by Assets 

260 Top Kuwait Domiciled Fixed Income Funds by 


260 Top Kuwait Money Market Funds by Assets 

Chapter 11 – Morocco 

272 Undertakings for Collective Investment in 

Transferable Securities 

Chapter 12 – Oman 

276 Local Fund Industry Breakdown by Selected 

Sponsors 

Chapter 13 - Qatar 

283 Fund Industry Breakdown by Selected Sponsors 

284 Banks – Investments under Management 

285 Banks – Investments under Management 

285 Breakdown of Investments under Management 

17

286 Banks – Funds Management by Currency 

287 Banks – Growth of Fund Assets 

287 Banks – Fund Assets 

290 Top Mutual Funds 

Chapter 14 – Saudi Arabia 

303 Fund Industry Profile 

304 Fund Industry Breakdown by Asset Manager 

305 Annual Change in Number of Funds, Assets & 

Subscribers by Asset Manager 

306 2010 Top Fund Management Companies by Assets 

& Subscribers 

306 Top Fund Management Companies by Assets 

307 Top Fund Management Companies by Subscribers 

307 Number of Funds by Type 

308 New Funds in 2011 

309 New Funds in 2012 

310 Number of New Funds by Sponsor Category 

310 Number of New Funds by Type 

311 Number of New Funds by Currency Denomination 

311 Fund Closures in 2012 

312 Number of Subscribers by Fund Type 

312 Assets of Funds (1992-2012Q3) 

313 Annual Growth Rates of Fund Assets & Subscriber 

Numbers 

313 Fund Assets by Category 

314 Average Fund Assets 

314 Breakdown by Category: Conventional versus 

Sharia Compliant 

315 Breakdown of Fund Numbers by Objective 

315 Breakdown of Fund Assets by Type 2012Q3 

316 Fund Assets by Type (1996-2012Q3) 



318 Top 10 Saudi Domiciled Funds by Assets 

319 Equity Fund Assets by Geographic Focus 

319 Top 10 Saudi Equity Funds by Assets 

320 Fund Assets in Tadawul by Sector 

320 Top Saudi Domiciled Fixed Income Funds by 


321 Top Saudi Money Market Funds by Assets 

18

Chapter 15 – United Arab Emirates 

330 Assets Under Management – Selected Companies 

331 Top Local Fund Management Companies 

332 Fund Industry Breakdown by Selected Firms 

333 Breakdown of Funds by Category – Conventional 

versus Sharia Compliant 

333 Breakdown by Base Currency 

334 Breakdown by Objective 

334 Breakdown by Type 

335 Recent Fund Launches 

335 Recent Fund Closures 

336 Assets Under Management at DIFC 

337 Fund Managers and Promotion at DIFC 

340 Financial Services Association UAE – Member List 

340 Top UAE Mutual Funds of Selected Sponsors 

341 Top 10 UAE Domiciled Mutual Funds by Assets 

Portions of the mutual fund information contained in this document were supplied by 

Lipper, a Thomson Reuters Company, subject to the following: Copyright 2013 

©Thomson Reuters, All rights reserved. Lipper is not responsible for the accuracy, 

reliability or completeness of the information obtained from Lipper. In addition, Lipper will 

not be liable for any loss or damage resulting from information obtained from Lipper or 

any of its affiliates. Past performance is not necessarily a guide to future performance 

and investors should remember that past performance is not a guarantee of future 

results. 

Disclaimer 

All rights reserved. No part of this publication may be reprinted, reproduced or utilised in 

any form either in whole or in part or by any electronic, mechanical or other means, now 

known or hereafter invented, including photocopying and recording, or stored in any 

retrieval system without prior permission in writing from the author. 

Whilst every effort has been made to ensure the accuracy of the information contained 

within this document, NBAD accepts no responsibility for any errors it may contain or for 

any loss financial or otherwise incurred by any person using this document. Readers are 

reminded that this is not an offer to buy or sell securities or invest in funds. Investors 

should seek independent financial advice prior to making any investment. 

19

Dubai Representative Office 

Mr Bishr Shiblaq 

DIFC, Currency House 

Level 6, Suite 4 

PO Box 482012, Dubai, UAE 

Tel: (971) 44 34 88 96 

Email : bishr.shiblaq@arendt.com

Global Trends 

Economic Developments 

Three speed growth 

Global economic growth is estimated at 3.2% in 2012 and projected to rise to 3.5% 

in 2013, according to the International Monetary Fund (IMF). The US economy is 

projected to grow by 2% in 2013 – a comparable pace to 2012. Near term prospects 

for the Eurozone, on the other hand, are poor with economic activity projected to be 

almost flat. Moreover, the aggregate figure for the Eurozone hides the two track nature of 

its economy with the core still registering some positive output growth and the periphery 

contracting. Current forecasts suggest that the Greek economy will contract by -4% 

in 2013. The Greek economy is forecast to register positive growth in 2015 and 

faces contraction in the meantime. Developed economies face slow growth because of 

the necessity to balance their books and tighten belts, banking sector deleveraging, and 

hesitancy about future prospects holding back activity. Emerging markets are the relative 

bright spot with growth forecast at 5.5%, up from 5.1% in 2012. 

More negative scenarios have become less likely with aggressive Central Bank 

policies particularly in Europe, but also in the US, and elsewhere. Monetary policy will 

remain accommodative in developed economies as fiscal tightening continues. In 

December, US Federal Reserve tied interest rate normalisation to unemployment and 

inflation for the first time. Federal Open Market Committee “decided to keep the target 

range for the federal funds rate at 0 to 0.25% and indicated this exceptionally low range 

would be appropriate at least as long as the unemployment rate remained above 6.5%, 

inflation between 1-2 years ahead was projected to be no more than a half percentage 

point above FOMC’s 2% goal, and longer term inflation expectations continued to be well 

anchored”. 

The picture, while murky, is not all gloom and doom. US home prices have 

registered 9 th 

consecutive months of increase. Eurozone periphery economies have 

achieved significant adjustment and no longer run the large external deficits they did two 

years ago. Alas, the adjustment is result of economic slowdown, hence the relentless 

rise in unemployment – in turn, pressuring sovereign fiscal balances. Fear of a deeper 

crisis has also compelled the Eurozone to take measures towards greater integration. 

23

Global Trends 

Risks to the outlook include politics getting in the way of necessary measures in the 

US and Eurozone. Geopolitical risk remains present as ever and a conflict that involves 

Iran would likely lead to a sharp rise in energy prices. On the other hand, a deeper 

slowdown emanating from Eurozone would soften energy prices and act as an automatic 

stabilizer to global activity. Other worries include historically high debt levels and lower 

than expected growth. Finally, extended period of low interest rates may be creating new 

bubbles in a number of geographies and asset classes which may burst when rates rise. 

Global Fund Trends 

Investor demand for bond funds against background of low interest rates 

Global mutual fund assets stood at US$ 24.8 trillion (-4.5% y-o-y) at the end of 

2012Q2 in 73,490 funds according to data compiled by Investment Company institute 

(ICI) from 46 countries. The decline in mutual fund assets largely emanated from the 

decline in global equity prices from a year earlier and due to Euro weakness and the 

exchange rate effect weighing on European fund assets in US$ terms. 

Global Fund Assets 

(trillions of U.S. dollars, end of period) 

26.1 

24.8 

24.6 

24.7 

23.0 

21.6 22.4 

23.7 

21.4 

18.9 18.8 

16.8 

25.9 25.6 

23.8 

24.8 

23.1 

Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 

Source: Investment Company Institute, Washington, DC, 2012 

24

Global Trends 

Worldwide funds experienced US$ 91 billion in net inflows in 2012Q2 (net inflows 

were US$ 193 billion in Q1) according to ICI, with flows into bond funds (US$ 155 

billion), while equity and money market funds saw outflows (US$ 18 billion and US$ 53 

billion, respectively). Money market funds have experienced outflows since 2009Q1 

due to a near zero interest rate environment. In 2012Q2, equity fund assets were 

lower than the first quarter and also lower than in 2011Q2. MSCI World index was down 

by -7.2% y-o-y in June 2012. It has since recovered as Eurozone fears eased somewhat. 

MSCI World index was up by 11.7% year to date as of December 10, 2012. 

25

Global Trends 

Trends by Fund Type 

Money market funds losing relative ground 

According to data 1 compiled by the Investment Company Institute, equity fund assets 

stood at US$ 9.9 trillion (-9.8% y-o-y) at end 2012Q2 and accounted for 40.1% of 

global fund assets, compared to 42.8% a year earlier. There were 28,239 equity funds 

(1.46% y-o-y). Bond funds were the second largest category – having overtaken money 

market funds in 2010 - with US$ 6.35 trillion (8.2% y-o-y) in assets under management, 

accounting for 25.6% of the total (up from 22.5% in 2011Q2). The share of money 

market funds in global assets declined to 18.5% in 2012Q2 (from 32% in 2009Q1). 

There were 3,005 money market funds (-6.4% y-o-y). Money market fund assets were 

US$ 4.584 trillion (-7.1% y-o-y). There were 13,089 fixed income funds (+1.6% y-o-y). 

Balanced fund assets stood at US$ 2.834 trillion (-6.3% y-o-y) accounting for about 

11.4% of fund assets. There were 17,156 balanced funds (+3.9% y-o-y). According to 

data by Blackrock, there were 4,747 exchange traded products (ETPs) with assets of 

US$ 1.87 trillion on November 2012 (US$ 1.53 trillion in 2011, US$ 1.48 trillion in 2010). 

In 2011, ETPs were from 193 providers and listed on 53 exchanges around the world. 

Global Fund Assets by Type 


Equity Bond Money Market Balanced Other 

10.5 

11.1 

11.0 

9.0 

9.5 

10.6 

9.9 

5.4 

5.6 

5.9 

5.6 

5.8 

6.3 

6.4 

5.0 

2.8 

5.0 

2.9 

4.9 

3.0 

4.7 

2.7 

4.7 

2.7 

4.7 

3.0 

4.6 

2.8 

Dec-10 Sep-11 Jun-12 


1 40 countries reported in 2011Q2. There is some variation in the number of reporting countries each 

quarter. Annual change figures should be considered solely indicative. ICI data exclude GCC region. 

26

Global Trends 

Breakdown of Global Fund Assets by Type 


2012Q2 

2011Q2 

Balanced 

11.4% 

Other 

4.3% 

Balanced 

11.7% 

Other 

4.3% 

Money 

Market 

18.5% 

Equity 

40.1% 

Money 

Market 

19.0% 

Equity 

42.4% 

Bond 

25.6% 

Bond 

22.6% 


Mutual Fund Assets by Region 

2012Q2 

2011Q2 

Europe 

30.0% 

Africa and 

Asia/Pacific 

13.0% 

Europe 

32.0% 

Africa and 

Asia/Pacific 

13.0% 

Americas 

57.0% 

Americas 

55.0% 


27

Global Trends 

Market Capitalisation by Region 

(December 2012) 

Europe 

24.1% 

Global Breakdown Selected MENA 2 

MENA 

2.3% 

Americas 

41.3% 

Asia/Pacific 

31.4% 

Africa/Other 

0.9% 

Jordan 

Morocco 

2.2% 

4.6% 

Egypt 

5.4% 

Kuwait 

8.2% 

UAE 

9.2% 

Qatar 

10.6% 

Oman 

1.7% 

Bahrain 

1.2% 

Lebanon 

0.7% 

Tunisia 

0.7% 

Turkey 

25.0% 

Saudi Arabia 

30.7% 

Source: Reuters 

Top Global and Regional Asset Management Companies 

(As of end-2012Q3 or latest available) 

Rank Company 

AuM 

(US$ billion) 

1 BlackRock Inc 3,673 

2 UBS 2,388 

3 State Street Corp 2,065 

4 Allianz 1,831 

5 Deutsche 1,446 

6 JP Morgan 1,381 

7 Bank NY Mellon 1,359 

8 Credit Suisse 1,332 

9 BNP Paribas 1,141 


2 MENA constituent countries for which data are provided here are those which a number of mutual 

funds describe as their investment universe. 

28

Global Trends 

Fiduciary Assets of Selected Companies in MENA* 

(US$ million) 

Fiduciary Assets 

Sponsor Company 

2007 2008 2009 2010 2011 

National Bank of Kuwait 9,974 10,272 8,425 9,272 9,104 

NCB Capital 7,694 6,777 7,479 11,105 9,057 

Samba Capital - 5,886 6,723 7,149 7,906 

Riyad Capital - 4,187 5,307 5,600 5,040 

Beltone Financial 5,014 3,845 4,760 3,915 3,853 

Global Investment House 8,574 8,036 5,958 5,089 3,762 

EFG-Hermes 6500 4200 4400 4700 3300 

Kuwait Financial Centre 2,974 2,786 3,667 2,987 

Qatar National Bank 2,002 2,919 2,791 3,571 2,977 

Commercial International AM - - - - 1,465 

Emirates NBD** 2,637 1,962 1,431 1,172 1,267 

National Bank of Egypt*** - - - - 1,227 

Coast Investment & Dev. - 1,084 895 1,155 954 

ANB Investment - - 705 708 805 

National Bank of Abu Dhabi^ - - - 841 695 

Abu Dhabi Commercial Bank 539 310 539 480 642 

Bank Muscat 213 450 718 619 582 

Gulf Investment Corporation - - 458 556 577 

Securities & Investment Co - - - - 547 

Saudi Hollandi Capital - 571 576 696 509 

Al Jazira Capital - - 240 285 344 

Al Bilad Investment - 310 274 256 212 

Commercial Bank of Kuwait 711 460 335 221 134 

Source: Financial Statements *These will differ from assets under management 

for a number of reasons **ENBD reports separate fiduciary assets aside from 

investment management which is not included here *** Date not indicated on 

website Âsset Management Group AuM stood at US$ 1,274 mn in Dec-2012. 

29

Global Trends 

MENA asset management industry is small in a global context 

In 2012Q2, Americas accounted for 57% of fund assets in the World according to data 

from Investment Company Institute. In December 2012, Americas accounted for 41% of 

global market capitalization. Market capitalization of selected countries in the Middle 

East and North Africa accounted for 1.7% of the World. A number of companies have 

produced MENA products which include Turkey. This aggregation would account for 

2.3% of the World market capitalization. Under this definition, Turkey and Saudi Arabia 

would account for 55.6% of MENA market capitalization. In December 2012, GCC 

market capitalization was 1.4% of the World. 

Fiduciary Fee Income of Selected Companies 

(US$ million) 

Fiduciary Fee Income 


2007 2008 2009 2010 2011 

National Bank of Kuwait 68.5 95.6 84.5 84.5 91.5 

Qatar National Bank 32.3 43.3 39.6 44.0 61.7 

NCB Capital 75.0 94.2 65.4 80.7 59.2 

Global Investment House 71.6 74.1 60.6 55.9 44.9 

Kuwait Financial Centre - 34.6 25.4 25.1 22.2 

Source: Financial Statements 

Fiduciary Fee Income to Assets of Selected Companies 

(Percentage) 

Fiduciary Assets 


2007 2008 2009 2010 2011 

Qatar National Bank 1.61% 1.48% 1.42% 1.23% 2.07% 

Global Investment House 0.84% 0.92% 1.02% 1.10% 1.19% 

National Bank of Kuwait 0.69% 0.93% 1.00% 0.91% 1.00% 

Kuwait Financial Centre 1.16% 0.91% 0.69% 0.74% 

NCB Capital 0.97% 1.39% 0.88% 0.73% 0.65% 

Source: Financial Statements 

30

Global Trends 

Focus: 2013 Outlook 

ING Investment Management 

ING Investment Management is predicting 2013 will see growth despite a significant risk 

of market shocks. However, it says upside risks are clearly visible, but investors may 

miss out on this because their confidence is low. 

New research from the investment manager conducted with European institutional 

investors reveals that 85% have major concerns about a Eurozone collapse, with the 

second biggest threat being seen as a slowdown in China – something 40% of 

respondents are very concerned about. 

ING Investment Management predicts World real GDP growth of 3.3% for 2013, 

compared to its estimate of 3% for 2012. It anticipates growth of 2.2% in the US this 

year, but this will fall slightly to 2% next year. Its estimate for the Eurozone and UK are 

-0.5% and 0.3%, and -0.1% and 1.3%, respectively. 

When considering emerging markets, ING IM anticipates GDP growth of 5.4% this year, 

which will rise to 6% in 2013. For China, it estimates that the corresponding figures will 

be 7.6% to 7.8%, but this will slip to 6.5% in 2014. 

According to Valentijn van Nieuwenhuijzen - Head of Strategy at ING Investment 

Management -, “forecasts for 2013 should be seen as a ‘tug of war’ between the positive 

dynamics of monetary easing adopted by authorities, and the drags exerted by fiscal 

tightening and private sector deleveraging. The world is still very volatile, and 

imbalances make the economy very susceptible to shocks. But there will always be new 

shocks, and investors must remember to ride the cyclical waves. 

Investor confidence is low, so many may miss out on the upside risks that we believe are 

clearly visible. House price data in the US is improving, and the building sector there is 

becoming more positive in its outlook. However, there is also confusing data such as the 

dichotomy in the US labour market, which is holding up, and declining capital 

31

Global Trends 

expenditure. This could be a sign of corporate retrenchment or of rational expansion - 

Capex is less easy to reverse than a hiring decision.” 

ASSET CLASS PREDICTIONS 

Fixed income 

ING IM believes that the risk profile in fixed income is turning as a result of a turning of 

the global cycle and signs of over-extension in investor flows into credits. Once nearterm 

political risks have passed a modest rise in treasury yields can be expected and 

credit flows might be redirected to other asset classes 

The investment manager remains overweight on emerging market debt local currency, 

and spread products. It has recently moved EM FX to its only significant overweight 

within fixed income spreads and has bought high yield, senior bank loan and emerging 

market debt hard currency back to a small underweight. ING IM has recently upgraded 

those asset classes where it feels the largest part of the risk premium normalisation is 

still to come – European Peripheral Treasuries to a small overweight, and Investment 

Grade Credit to neutral (from a small underweight). 

Overall, ING IM believes that the case to move from credit to equity is building. 

Equities 

ING IM warns that analysts’ estimates of equities are far too high, with 2013 bottom up 

earnings still coming in at double-digit growth levels. This is in contrast to ING IM’s 

corresponding top down earnings estimates of less than 5% in the US and close to 0% in 

the Eurozone. 

Patrick Moonen - Senior Equity Strategist, ING IM - expects “continued negative 

earnings momentum in 2013, but strong corporate balance sheets. This good financial 

health, combined with low interest rates may lead to a rise in corporate spending, more 

M&A activity and Capex, provided corporate confidence returns. He also expects to see 

more buy-backs and higher dividends - average dividend growth of 3.5% in Europe, and 

6% in the US over the next two years.” 

32

Global Trends 

ING IM says that the equity risk premium will remain high, especially in Europe. 

However, it also believes that the risk premium differential relative to the US does not 

reflect the different risk dynamics of the two regions. Hence, it prefers European equities 

to US ones. It also believes that emerging market equities are beginning to look 

attractive, provided that the relative momentum in economic and earnings data continue 

to improve. 

The investment manager says that it is moving towards a more pro-cyclical sector 

allocation. This is because of an improvement in the economic surprise data, in the 

relative earnings momentum of cyclical sectors and also because valuations are 

attractive relative to defensives. It also remains overweight on financials because it 

believes systemic risk in Europe has been reduced and the fundamental outlook in the 

US has improved as witnessed by positive credit growth and a recovering housing 

market. Overall, it expects high single digit market performance for equities during 2013. 

Emerging markets 

ING IM says that an improving global trade picture should help fuel growth in emerging 

markets. Furthermore, growth in China pushes any fears of a hard landing here to the 

background, and that Chinese outperformance is a key positive signal for emerging 

market equities in general. 

According to Maarten-Jan Bakkum - emerging markets strategist, ING -, “there are 

strong arguments to support the view that growth in China will continue to slow down 

over the next five years to a level of around 5%. However, the growth rate could 

temporarily pick up somewhat due to government stimulus and a slight recovery in world 

trade growth, which will have a positive effect on growth forecasts elsewhere in the 

emerging world.” 

However, the investment manager warns that there are weak capital flows to emerging 

markets, which has included outflows over the past five quarters due to fears over a 

China slowdown, for example. 

ING IM says that the biggest challenges for investors focusing on emerging markets is 

balancing concerns about the structural downturn of growth in China, the worsening 

33

Global Trends 

economic policies in countries such as South Africa and the drying up of capital flow to 

emerging markets. 

It warns that countries that don’t have their house in order are at risk in the current 

environment. Its preferred focus in emerging markets is India, Brazil, Russia and 

Turkey. 

Real Estate 

ING IM is overweight here as the search from investors for a perceived ‘safe’ yield 

increases. The US housing market is also recovering and the dividend from this asset 

class remains attractive in the developed market. The investment manager favours 

‘riskier’ real estate assets and is overweight in the Eurozone. 

Commodities 

Here, ING IM is underweight. It points to a weak but improving manufacturing sector, 

and as result of quantitative easing, it is overweight in Industrial Metals. It is no longer 

overweight in Precious Metals. It also believes that agricultural prices may peak soon. 

INVESTOR ASSET ALLOCATION FOR 2013 

ING IM’s survey of European institutional investors reveals that more investors plan to 

decrease their exposure to equities next year rather than increase, (26% versus 22%), 

and that investors intend to increase their overall exposure to real estate and 

commodities. They plan to reduce their exposure to cash and equities. 

34

Global Trends 

Mutual Fund Assets by Country 

(US$ million) 

COUNTRY 2008 2009 2010 2011 2012Q2 

World 18,959,869 22,993,340 24,742,697 23,829,128 24,803,909 

1 United States 9,603,649 11,120,153 11,820,650 11,621,595 12,186,604 

2 Luxembourg 1,860,763 2,293,973 2,512,874 2,277,465 2,343,636 

3 Australia 841,133 1,198,838 1,455,850 1,440,128 1,535,778 

4 France 1,591,082 1,805,641 1,617,176 1,382,068 1,394,348 

5 Ireland 720,486 860,515 1,014,104 1,061,051 1,136,830 

6 Brazil 479,321 783,970 980,448 1,008,928 1,023,961 

7 United Kingdom 504,681 729,141 854,413 816,537 857,999 

8 Canada 416,031 565,156 636,947 753,606 784,872 

9 Japan 575,327 660,666 785,504 745,383 731,386 

10 China 276,303 381,207 364,985 339,037 371,150 

11 Switzerland 135,052 168,260 261,893 273,061 294,112 

12 Germany 237,986 317,543 333,713 293,011 290,567 

13 Korea, Rep. of 221,992 264,573 266,495 226,716 240,881 

14 Spain 270,983 269,611 216,915 195,220 183,537 

15 Sweden 113,331 170,277 205,449 179,707 182,366 

16 Italy 263,588 279,474 234,313 180,754 167,755 

17 South Africa 69,417 106,261 141,615 124,976 129,166 

18 Mexico 60,435 70,659 98,094 92,743 104,746 

19 India 62,805 130,284 111,421 87,519 97,841 

20 Denmark 65,182 83,024 89,800 84,891 90,798 

21 Norway 41,157 71,170 84,505 79,999 84,077 

22 Austria 93,269 99,628 94,670 81,038 80,011 

23 Belgium 105,057 106,721 96,288 81,505 78,217 

24 Netherlands 77,379 95,512 85,924 69,156 66,819 

25 Finland 48,750 66,131 71,210 62,193 64,763 

26 Taiwan 46,116 58,297 59,032 53,437 56,367 

27 Chile 17,587 34,227 38,243 33,425 36,520 

28 Liechtenstein 20,489 30,329 35,387 32,606 32,968 

29 New Zealand 10,612 17,657 19,562 23,709 27,085 

30 Poland 17,782 23,025 25,595 18,463 20,193 

31 Saudi Arabia 20,497 23,879 25,264 21,918 23,325 

32 Turkey 15,404 19,426 19,545 14,048 14,993 

33 Argentina 3,867 4,470 5,179 6,808 8,702 

34 Bahrain - Local & Foreign 10,726 8,733 9,173 8,378 8,244 

35 Hungary 9,188 11,052 11,532 7,193 7,435 

36 Portugal 13,572 15,808 11,004 7,321 6,598 

37 Trinidad & Tobago 5,832 5,812 5,989 6,152 

38 Bahrain - Local 5,743 5,186 5,658 4,982 

39 Greece 12,189 12,434 8,627 5,213 4,487 

40 Czech Republic 5,260 5,436 5,508 4,445 4,284 

41 Pakistan 1,985 2,224 2,290 2,984 3,764 

42 Philippines 1,263 1,488 2,184 2,363 2,956 

43 Malta 2,132 2,905 

44 Russia 2,026 3,182 3,917 3,072 2,877 

45 Slovakia 3,841 4,222 4,349 3,191 2,803 

46 Qatar 2,846 2,736 3,432 2,940 2,716 

47 Romania 326 1,134 1,713 2,388 2,251 

48 Slovenia 2,067 2,610 2,663 2,279 2,226 

49 Costa Rica 1,098 1,309 1,470 1,266 1,571 

50 Bulgaria 226 256 302 291 267 

Source: Investment Company Institute, Washington, DC, 2012. GCC Central Banks 

35

Global Trends 

Number of Mutual Funds by Country 

COUNTRY 2008 2009 2010 2011 2012Q2 

World 68,978 67,933 69,890 73,033 73,731 

1 Luxembourg 9,351 9,017 9,353 9,462 9,449 

2 Korea, Rep. of 9,384 8,703 8,687 9,064 9,302 

3 United States 8,022 7,684 7,580 7,637 7,663 

4 France 8,301 7,982 7,791 7,744 7,595 

5 Brazil 4,169 4,744 5,618 6,513 7,016 

6 Japan 3,333 3,656 3,905 4,196 4,303 

7 Ireland 3,097 2,721 2,899 3,085 3,109 

8 Canada 2,015 2,075 2,117 2,655 2,799 

9 Spain 2,944 2,588 2,486 2,474 2,393 

10 Chile 1,484 1,691 1,912 2,150 2,221 

11 Germany 1,675 2,067 2,106 2,051 2,089 

12 United Kingdom 2,371 2,266 2,204 1,941 1,926 

13 Belgium 1,828 1,845 1,797 1,723 1,573 

14 Austria 1,065 1,016 1,016 1,003 992 

15 South Africa 884 904 943 947 951 

16 China 429 547 660 831 930 

17 New Zealand 643 702 700 709 710 

18 India 551 590 658 680 697 

19 Switzerland 572 509 653 664 673 

20 Italy 742 675 650 659 629 

21 Liechtenstein 335 348 409 437 582 

22 Taiwan 443 460 487 534 549 

23 Denmark 489 483 490 500 502 

24 Sweden 508 506 504 508 479 

25 Mexico 431 407 434 464 474 

26 Russia 528 480 462 472 466 

27 Netherlands - - - 495 459 

28 Norway 530 487 507 507 404 

29 Finland 389 377 366 368 373 

30 Turkey 304 286 311 337 347 

31 Argentina 253 252 254 281 292 

32 Saudi Arabia 262 244 243 249 241 

33 Poland 210 208 214 226 237 

34 Greece 239 210 213 196 197 

35 Portugal 184 171 171 173 172 

36 Hungary 270 264 276 152 160 

37 Bahrain - Local 142 138 129 127 

38 Pakistan 83 96 125 137 141 

39 Slovenia 125 125 130 137 137 

40 Bulgaria 81 85 90 92 90 

41 Czech Republic 76 78 80 80 79 

42 Malta - - - 59 64 

43 Costa Rica 85 64 68 63 63 

44 Romania 52 51 56 105 60 

45 Slovakia 56 54 58 63 59 

46 Philippines 43 41 43 47 48 

47 Trinidad & Tobago - 36 35 36 36 

Source: Investment Company Institute, Washington, DC, 2012. GCC Central Banks 

36

Global Trends 

Selected Data by Country 

Average Size of Fund (US$ mn) Nominal GDP (US$ mn) Market Capitalization (US$ mn) 

COUNTRY 2012Q2 COUNTRY 

2012 COUNTRY 

Jul-12 

World 337 World 71,277,364 World 51,117,047 

1 United States 1,590 United States 15,653,366 United States 16,718,967 

2 United Kingdom 445 China 8,250,241 China 5,887,244 

3 Switzerland 437 Japan 5,984,390 Japan 3,553,800 

4 China 399 Germany 3,366,651 United Kingdom 3,355,275 

5 Sweden 381 France 2,580,423 Canada 1,997,538 

6 Ireland 366 United Kingdom 2,433,779 France 1,624,238 

7 Canada 280 Brazil 2,425,052 Germany 1,518,544 

8 Italy 267 Italy 1,980,448 Australia 1,323,864 

9 Luxembourg 248 Russia 1,953,555 India 1,255,912 

10 Mexico 221 India 1,946,765 Switzerland 1,214,570 

11 Europe 210 Canada 1,770,084 Brazil 1,133,944 

12 Norway 208 Australia 1,542,055 Korea, Rep. of 1,117,061 

13 France 184 Spain 1,340,266 Taiwan 804,171 

14 Denmark 181 Mexico 1,162,891 Russia 766,122 

15 Finland 174 Korea, Rep. of 1,151,271 Sweden 561,797 

16 Trinidad & Tobago 171 Turkey 783,064 Spain 536,733 

17 Japan 170 Netherlands 770,224 Mexico 523,660 

18 Brazil 146 Saudi Arabia 657,049 South Africa 485,683 

19 Netherlands 146 Switzerland 622,855 Italy 483,145 

20 India 140 Sweden 520,256 Saudi Arabia 365,477 

21 Germany 139 Norway 499,827 Chile 303,597 

22 South Africa 136 Belgium 476,796 Turkey 292,619 

23 Taiwan 103 Argentina 474,812 Netherlands 289,744 

24 Saudi Arabia 88 Poland 470,354 Belgium 289,491 

25 Poland 85 Taiwan 466,054 Norway 278,017 

26 Austria 81 Austria 391,469 Denmark 241,251 

27 Spain 77 South Africa 390,919 Philippines 226,577 

28 Philippines 62 Denmark 309,180 Poland 164,512 

29 Liechtenstein 57 Chile 268,278 Finland 161,077 

30 Czech Republic 54 Greece 254,978 Qatar 125,764 

31 Belgium 50 Finland 247,189 Austria 107,145 

32 Slovakia 48 Philippines 240,664 Ireland 107,109 

33 Hungary 46 Pakistan 230,525 Portugal 67,297 

34 Malta 45 Portugal 210,620 New Zealand 46,784 

35 Turkey 43 Ireland 204,710 Pakistan 44,873 

36 Bahrain 39 Czech Republic 193,513 Greece 39,881 

37 Portugal 38 Qatar 184,566 Czech Republic 36,301 

38 New Zealand 38 Romania 171,401 Argentina 26,920 

39 Romania 38 New Zealand 166,923 Luxembourg 23,502 

40 Argentina 30 Hungary 128,844 Hungary 20,406 

41 Pakistan 27 Slovakia 91,186 Bahrain 14,075 

42 Korea, Rep. of 26 Luxembourg 55,287 Romania 13,381 

43 Costa Rica 25 Bulgaria 50,806 Trinidad & Tobago 11,513 

44 Greece 23 Slovenia 45,421 Slovenia 5,871 

45 Chile 16 Costa Rica 44,884 Slovakia 5,127 

46 Slovenia 16 Bahrain 26,509 Bulgaria 5,115 

47 Russia 6 Trinidad & Tobago 23,837 Malta 3,584 

48 Bulgaria 3 Malta 8,415 Liechtenstein 

49 Liechtenstein 4,000 Costa Rica 

50 

Source: Investment Company Institute, Washington, DC, 2012. IMF. Reuters 

37

Global Trends 

Focus: Luxembourg 

Emmanuelle Entringer– Senior Advisor 

Investment Funds 

Arendt & Medernach – Avocats 

Why Luxembourg? 

1. Its location 

Ideally situated at the cross-roads between 

France, Belgium and Germany, Luxembourg is 

a small but highly stable country. Despite being largely referred to as offshore, 

Luxembourg has no access to the sea, no shores, but one of the highest GDP per capita 

in the world. 

It is one of the six founding members of the European Union (EU) and a member of the 

Eurozone. Luxembourg hosts the European Court of Justice, European Investment 

Bank, European Court of Auditors and various departments of the European 

Commission. 

2. Its established financial center 

Over the past 25 years, the Luxembourg financial sector has developed and became a 

major international market player, offering a large diversification of products. It is now 

home to over 140 banks, 3870 investment funds and 350 insurance and reinsurance 

companies. 

The legal and regulatory framework is comprehensive and offers a high degree of 

flexibility which allows the development of tailor-made products and solutions. 

This has proven particularly true with regards to the investment funds industry. 

Luxembourg was the first EU Member State to implement European fund related 

directives and has within a couple of decades developed into the second largest 

investment fund centre worldwide, after the United-States, with over 2 trillion euro assets 

under management by regulated investment funds. 

3. Its favorable tax regime 

Luxembourg’s tax regime is a key factor when considering how to structure an 

investment and whether to use a regulated or unregulated vehicle. Luxembourg benefits 

from a well-developed double tax treaty network which helps to avoid or reduce double 

taxation in cross-border investment structures. There are 64 treaties currently in force, 

38

Global Trends 

notably with the UAE, Qatar, Bahrain and 18 additional ones under negotiation or 

awaiting ratification. 

Funds are normally subject to a subscription tax of 0.05% per annum payable quarterly 

on the basis of the value of their aggregate net assets at the end of the relevant calendar 

quarter. A number of exceptions and exemptions apply, for instance, to money market 

and cash funds, as well as to funds, sub-funds and asset classes which are designed for 

institutional investors. 

Which Luxembourg fund structure? 

Luxembourg offers a diversified range of both regulated and unregulated vehicles to suit 

asset managers’ and investors’ needs and to cover a wide scope of investments from 

equity funds to complex hedge funds, private equity vehicles and real estate funds, to 

name a few. 

Investment managers and investors based in the GCC and more broadly in the MENA 

region are usually familiar with either Undertakings for Collective Investment in 

Transferable Securities (UCITS) or Specialized Investment Funds (SIF). These are the 

two most common types of Luxembourg regulated funds, indeed out of the 3873 funds 

domiciled in Luxembourg (as at 14.11.2012); 1822 are UCITS and 1488 are SIFs. 

I. UCITS 

UCITS allow marketing of their units/shares freely in all Member States of the European 

Union and are governed by Part I of the law dated 17 December 2010 which implements 

the so-called UCITS IV directive in Luxembourg. 

1. worldwide distribution 

The most appealing aspect of UCITS lies in the large distribution opportunities which 

they offer. Luxembourg UCITS are offered in over 50 jurisdictions world-wide. Thanks to 

the so-called European passport, UCITS may be distributed in the European Union, 

without additional formalities. In addition, UCITS being a recognized label in a large 

number of countries outside the European Union, including in the GCC, MENA and in 

Asia, the registration of UCITS and therefore their distribution, is facilitated. 

As a matter of example, more than 80% of foreign funds registered in Bahrain are 

Luxembourg domiciled. Luxembourg UCITS are also recognized by the UAE SCA and 

can be easily registered for public distribution. 

2. retail by nature 

Retail by nature, UCITS have features designed to ensure investor protection. They are 

highly regulated collective investment schemes. They are therefore subject to a high 

39

Global Trends 

level of supervision and transparency requirements through the information provided to 

investors (prospectus, key investor information document, annual and semi-annual 

report). UCITS must also ensure a certain level of diversification of their assets, maintain 

an appropriate risk management process and only invest in certain types of assets 

(mostly listed securities, bonds, index components (directly or indirectly), derivatives and 

assimilated assets). 

3. supervision 

UCITS are subject to prior approval and ongoing supervision of the Luxembourg 

regulator (the “Commission de Surveillance du Secteur Financier” (CSSF)). UCITS need 

in particular to evidence some substance in Luxembourg either by themselves or by 

appointing a management company in Luxembourg or in another Member State. 

In addition, the investment manager of a UCITS must be regulated and is subject to 

CSSF approval. Where such an asset manager is supervised by a non-EU regulator, 

such as in the UAE, SCA or DFSA, a certain cooperation needs to exist between such 

regulator and the CSSF. This is usually established through the signature of a 

memorandum of understanding (MOU) between the two authorities. There are a number 

of such MOU in place with GCC regulators, such as SCA, DFSA and QFCRA. 

II. Specialised Investment Funds 

SIFs are governed by the law of 13 February 2007, as amended. 

1. institutional by nature 

SIFs are reserved for investment by qualified investors complying with certain conditions. 

As such investors are deemed knowledgeable of the finance industry; the transparency 

requirements are also lighter. For instance, no half annual report nor key investor 

information document are required. 

SIFs are usually favored by asset managers looking for a regulated fund structure 

without the constraints of a UCITS product, as they are targeting a limited base of 

investors. The increasing interest of family offices for this type of investment vehicle is 

also worth noting. 

2. lighter regulation 

SIFs may invest in all types of asset classes and strategies (hedge funds, private 

equity…), are subject to light diversification requirements (in principle no more than 30% 

per issuer) and may be close ended. 

However, in anticipation of the implementation of the Alternative Investment Fund 

Managers Directive (AIFMD), in Luxembourg, the legislator has recently imposed that 

40

Global Trends 

investment managers of SIFs be in principle regulated, as well as the adoption by the 

SIFs of a risk management process and of a conflict of interest policy. These fund 

structures albeit regulated remain the most flexible ones available. 

3. limited distribution 

Unlike UCITS, no EU passport is available to SIFs, for the time being. The funds are 

therefore either registered on a country by country basis or more generally and where 

authorized sold on a private placement basis. 

This should however change with the implementation in Luxembourg of the AIFMD 

scheduled for the first quarter of 2013. 

III. Common features of Luxembourg regulated funds 

1. contractual or incorporated 

The creation of funds under the contractual form (FCP) or as investment companies are 

both permitted, the latter may be established either as SICAVs or as SICAFs. 

The FCP is a contractual vehicle organising the undivided co-ownership of assets. It has 

no legal personality and is hence not subject to any specific corporate law requirements. 

FCPs are therefore managed by a management company. 

SICAV and SICAF are corporate vehicles with a legal personality and as such submitted 

to general Luxembourg company law. Whereas the capital of the SICAV is variable and 

at all times equal to the net assets of the fund, the SICAF has a fixed capital which can 

only be increased or reduced subject to formal decisions in line with specific corporate 

law requirements. 

2. umbrella or stand-alone 

Luxembourg funds can be structured either as stand-alone or as umbrella structures. 

Various classes of shares / units with different characteristics may be created in a standalone 

fund as well as in each of the sub-funds of an umbrella structure. An umbrella 

structure may accommodate various needs, such as for example different investment 

policies, reference currencies, categories of investors or distribution channels. Within an 

umbrella structure, each sub-fund is only responsible for its own debts, commitments 

and other obligations, unless the constitutional documents of the fund provide otherwise. 

It is in principle possible to convert shares/units from one sub-fund to another. Crossinvestments 

between sub-funds of the same umbrella fund are allowed. 

3. redomiciliation 

Luxembourg law offers a number of flexible solutions in order to re-domicile funds set-up 

in other EU jurisdictions or with more exotic and less regulated domiciles. 

41

Global Trends 

After the 2008 downturn there has been a certain trend towards Luxembourg and more 

regulated funds, especially from asset managers in the GCC. 

4. shari’ah compliance 

Finally, it is worth noting that Luxembourg’s current legal framework allows for the 

implementation of shari’ah compliant investment strategies. Indeed, Luxembourg is a 

prime location for the setting-up of shari’ah-compliant investment structures, as its 

flexible approach provides for a variety of alternative structures. The Luxembourg 

authorities’ support, a reliable and legal investment environment and a tax-efficient 

system encourage Islamic companies and financial institutions to perform Shari’ahcompliant 

investments through Luxembourg vehicles. 

Luxembourg is more than just regulated funds… 

The universe of Luxembourg investment vehicles is not limited to regulated investment 

funds. Luxembourg is one of Europe’s primary locations for setting up intermediary 

vehicles for holding, financing, leasing, managing intellectual property (IP) and trading. 

These vehicles are commonly referred to as SOPARFIs. Such entities are tax friendly, 

usually benefit from double tax treaties signed by Luxembourg, are generally available to 

any type of investors and, so far, not subject to any restriction, risk diversification or 

supervision by the Luxembourg regulatory authority. 

In addition, Luxembourg offers family wealth management companies which are 

dedicated to private investors (i.e. investors managing their private wealth) and which 

benefit from a specific tax regime. These are investment vehicles tailored for wealthy 

individual investors, willing to pool their assets either for tax efficiency or estate planning. 

It is finally worth mentioning the securitisation law of 22 March 2004 (Securitisation Law) 

as amended which offers the most complete, comprehensive and advantageous legal 

framework in Europe today. It is also the first securitisation law in Europe specifically 

designed for cross-border securitisations. The Securitisation Law covers basically all 

types of securitisation transactions, in the broadest meaning of the term, ranging from 

term transactions and commercial paper conduits to simple repackaging, regardless of 

the type of asset classes, providing the concept of securitisation with a very flexible 

scope so as to cover both traditional securitisation structures as well as the most 

innovative ones. 

42

MENA Region Trends

Middle East & North Africa 

Regional Economic Developments 1 

Case in Contrast: Oil Exporters versus Importers 

Key policy issues for oil importers are restoration of political stability, implementation of 

austerity measures and reforms, while the oil exporters are in a strong position to pursue 

policy agendas of job creation and economic diversification. The two groups are 

connected through investment links, transfers including remittance flows, and service 

related expenditures and complement each other. 

MENA real GDP growth rate is forecast to have accelerated in 2012 to 5.3% yearon-year, 

up from 3.3% in 2011, according to the International Monetary Fund (IMF). Oil 

exporters were the main engines of output growth in 2012, with real GDP growth 

estimated at 6.6% y-o-y (up from 3.9% in 2011). MENA oil importers – where domestic 

unrest was more prevalent - have grappled with sub-par growth in 2012 and 2011 of 

1.2% and 1.4%, respectively. MENA nominal GDP is estimated at US$ 2.95 trillion in 

2012 (7.2% year-on-year). 

The region continued to register significant current account surpluses driven by 

oil exporters – estimated at US$ 361 billion in 2012 (12.2% of GDP) . This is down 

from US$ 392 billion in 2011 (14.2% of GDP), but almost double the 2010 level. Oil 

importers in the region are forecast to register a current account deficit of US$ 36 billion 

(6.9% of GDP). Aggregate external surpluses means that the region remains a 

capital exporter. Central Bank international reserves are estimated to have reached 

US$ 1.38 trillion in 2012 2 . MENA economies are forecast to register a budget surplus of 

2.5% of GDP in 2012 driven by oil exporters which are expected to post a surplus to the 

tune of 6.1% of GDP. MENA oil importers are expected to post a deficit of 8.7% of GDP, 

the highest in more than a decade. 

1 

MENA constituents in the section on economic developments do not include Turkey in 

line with IMF classification. Data tables and various charts on the asset management 

industry include Turkey reflecting investment objectives of a number of funds. 

2 

Excludes sovereign wealth funds. 

45


In 2013, IMF projects MENA real GDP growth easing to 3.6%. Growth is expected to 

be most rapid in Libya and Iraq at 16.7% and 14.7%, respectively. Growth is expected 

to decelerate in regional oil exporters to 3.8% as oil output growth moderates. 

Economic activity is expected to pick up modestly in oil importers to 3.3% due to 

base effects and gradual restoration of confidence. MENA nominal GDP is forecast 

to reach US$ 3.11 trillion. Current account surplus is forecast at US$ 330 billion (10.6% 

of GDP). Central Bank International reserves are projected to reach US$ 1.56 trillion. 

MENA fiscal surplus is expected to ease to 1.4% of GDP - even though oil importers are 

expected to reduce their deficit to 7.7% of GDP – driven by a moderation in surpluses at 

oil exporters (4.4% of GDP). 

Market Performance 

17-Dec-12 

Latest 

Price change % 

MENA Index 1 Day 5 Day 1 Mo 3 Mo YTD 1 Year 

P/E Ratio 

(2012) 

Value Traded 

US$ mn 

ABU DHABI 2,614 0.1 (2.8) (2.9) (0.5) 8.8 8.3 8.09 19 

DUBAI 1,576 (0.5) (2.3) (2.5) (0.8) 16.5 15.3 10.13 32 

OMAN 5,636 (0.2) (0.2) 0.0 0.3 (1.0) (1.4) 9.71 5 

QATAR 8,335 0.1 (0.2) (1.3) (3.3) (5.1) (4.9) 11.13 20 

BAHRAIN 1,046 (0.0) 0.3 (1.6) (2.4) (8.5) (9.8) - - 

KUWAIT 5,938 0.1 0.5 2.4 2.4 2.1 2.0 - 93 

SAUDI ARABIA 6,851 0.4 1.0 0.9 (4.2) 6.8 9.6 12.52 1,393 

EGYPT 5,304 2.7 5.0 (6.3) (10.0) 46.4 35.3 10.75 54 

JORDAN 1,922 0.3 0.4 0.0 0.9 (3.7) (3.7) n.a 9 

MOROCCO 19,773 (0.2) (1.3) (0.6) (1.2) (12.8) (13.0) 17.70 - 

TURKEY 76,293 (0.9) 0.1 7.8 12.0 48.8 47.7 11.55 1,141 

MSCI 

MSCI UAE DOMESTIC 266 0.0 (1.5) (1.0) 1.6 19.7 17.0 10.26 - 

MSCI EM 1,043 0.0 1.3 7.5 3.0 13.8 15.3 11.98 - 

MSCI EMEA 347 0.0 1.3 7.3 (1.0) 14.3 16.6 8.58 - 

MSCI EM ASIA 445 (0.1) 1.4 7.8 5.7 17.5 19.0 12.60 - 

MSCI GCC Countries ex Saudi 427 (0.2) (0.3) 0.2 3.4 (0.2) (0.4) - - 

MSCI WORLD 1,325 (0.2) 0.3 5.8 (1.3) 12.1 15.6 13.60 - 

WORLD 

NASDAQ COMPOSITE INDEX 2,971 (0.7) (0.2) 4.1 (6.5) 14.1 16.3 16.10 13,222 

DOW JONES INDUS. AVG 13,135 (0.3) (0.2) 4.3 (3.1) 7.5 10.7 12.60 4,349 

S&P 500 INDEX 1,414 (0.4) (0.3) 3.9 (3.3) 12.4 15.9 13.62 23,972 

NIKKEI 225 9,880 1.5 3.6 9.5 7.9 16.9 17.6 - - 

FTSE 100 INDEX 5,922 (0.1) 0.1 5.6 0.5 6.3 9.9 11.65 - 

DAX INDEX 7,596 0.2 1.0 9.3 2.6 28.8 33.2 11.23 - 

SHANGHAI SE COMPOSITE 2,162 0.5 3.7 7.3 4.0 (1.7) (2.8) 10.47 - 

BRAZIL BOVESPA INDEX 59,605 0.5 1.9 7.6 (3.6) 5.0 6.3 17.27 - 

RUSSIAN TRADED INDEX 2,153 0.1 1.4 9.0 (5.4) 10.4 11.0 5.41 - 

BSE SENSEX 30 INDEX 19,337 0.1 (0.4) 5.6 4.3 25.1 24.8 15.25 - 

VIX Index 17 0.4 1.1 0.6 2.4 (6.4) (7.3) - - 

US 10 YEAR TREASURY YIELD 2 0.0 0.1 0.1 (0.1) (0.2) (0.1) - - 

Source: A. Durand 

46


Industry Overview 

Middle East & North Africa Region 

At the end of June 2012, this survey identified 1,424 funds (with assets of US$ 89.6 

billion). At end-2011, there were 1,438 funds in the dataset (with assets of US$ 87.1 

billion). The dataset includes funds domiciled in the Middle East and North Africa 

region, local company sponsored funds irrespective of domicile, and funds with MENA or 

one of the constituent markets as their geographic focus. The dataset includes 1340 

MENA domiciled funds (assets under management US$ 86.6 billion), and 1,085 funds 

with MENA or one of the constituent markets as their geographic focus (assets under 

management US$ 74.5 billion). 

Number of Funds in Dataset 

(June 2012) 

Locally 

Incorporated 

Funds 

Locally 

Sponsored Funds 

(incl. domiciled 

abroad) 

Funds by 

Geographic 

Focus 

Bahrain 42 15 1 

Kuwait 65 84 52 

Oman 12 19 7 

Qatar 9 13 12 

S. Arabia 250 243 145 

UAE 43 96 19 

Egypt 85 89 83 

Jordan 3 8 1 

Lebanon 9 13 8 

Morocco 327 327 327 

Tunisia 107 107 107 

Turkey 388 388 323 

GCC 71 

MENA 85 

Source: Lipper, a Thomson Reuters Company 

47


Fund Assets 

(millions of U.S. dollars ,June 2012) 

Locally 

Incorporated 

Funds 

Locally Sponsored 

Funds (incl. 

domiciled abroad) 

Funds by 

Geographic 

Focus 

Bahrain 1,392 195 18 

Kuwait 4,880 5,701 4,501 

Oman 507 544 404 

Qatar 157 599 339 

Saudi Arabia 23,418 23,293 18,996 

UAE 1,180 2,521 760 

Egypt 9,862 10,015 9,073 

Jordan 5 57 7 

Lebanon 236 612 570 

Morocco 26,095 26,095 26,095 

Tunisia 3,268 3,268 3,268 

Turkey 15,632 15,632 10,444 

GCC 3,140 

MENA 2,421 


Country Breakdown of MENA Domiciled Mutual Funds 


Breakdown by Number of Funds 

Turkey 

29.0% 

Kuw ait 

4.9% 

Bahrain 

3.1% 

Tunisia 

8.0% 

Morocco 

24.4% 

Om an 

0.9% 

Qatar 

0.7% 

Saudi 

Arabia 

19.0% 

UAE 

3.1% 

Egypt 

6.1% 

Lebanon 

0.7% 

Breakdown by Fund Assets 

Bahrain 

1.6% 

Turkey 

18.0% 

Tunisia 

3.8% 

Morocco 

30.0% 

Kuw ait 

5.6% 

Lebanon 

0.3% 

Om an 

0.6% 

Qatar 

0.2% 

Saudi 

Arabia 

27.5% 

Egypt 

11.3% 

UAE 

1.1% 


48


Average Fund Assets 

(millions of U.S. dollars, June 2012) 

Locally 

Incorporated 

Funds 

Locally 

Sponsored Funds 

(incl. domiciled 

abroad) 

Funds by 

Geographic 

Focus 

Bahrain 33.2 13.0 17.9 

Kuwait 75.1 67.9 86.6 

Oman 42.2 28.6 57.8 

Qatar 17.5 46.1 28.2 

S. Arabia 93.7 95.9 131 

UAE 27.4 26.3 40.0 

Egypt 116 112.5 109.3 

Jordan 1.6 7.1 6.5 

Lebanon 26.2 47.1 71.2 

Morocco 79.8 79.8 79.8 

Tunisia 30.5 30.5 30.5 

Turkey 40.3 40.3 32.3 

GCC 44.2 

MENA 28.5 


Breakdown of MENA Domiciled Mutual Funds by Type 




Other 

28.4% 

Equity 

38.4% 

Other 

6.1% 

Equity 

22.3% 

Money 

Market 

11.8% 

Fixed 

Income 

21.4% 

Money 

Market 

46.8% 

Fixed 

Income 

24.9% 


49


Number of Mutual Funds by Domicile & Type 


Equity 

Fixed 

Income 

Money 

Market 

Other 

Bahrain 32 4 2 4 

Kuwait 47 5 6 7 

Oman 11 - 1 - 

Qatar 9 - - - 

S. Arabia 184 9 45 12 

UAE 29 8 2 2 

Egypt 34 2 29 20 

Jordan - - - 3 

Lebanon - 3 1 5 

Morocco 82 157 33 55 

Tunisia 15 32 1 59 

Turkey 43 70 50 225 


Assets of Mutual Funds by Domicile and Type 


Equity 

Fixed 

Income 

Money 

Market 

Other 

Bahrain 778 557 16 42 

Kuwait 3,880 287 307 406 

Oman 497 - 9.7 - 

Qatar 157 - - - 

S. Arabia 8,566 179 14,348 326 

UAE 724 227 7 221 

Egypt 384 15.1 9,266 208 

Jordan - - - 5 

Lebanon - 82 40 114 

Morocco 2,695 16,364 6,394 642 

Tunisia 19 2,903 - 346 

Turkey 274 1,134 11,551 2,673 


50


Average Assets of Mutual Funds Investing in the Region by Type and Domicile 


Equity 

Fixed 

Income 

Money 

Market 

Other 

Bahrain 24.3 139.2 7.9 10.5 

Kuwait 82.5 57.5 51.1 58 

Oman 45.2 - 9.7 - 

Qatar 17.5 - - - 

S. Arabia 46.6 19.9 318.8 27.1 

UAE 25 28.4 3.7 110.7 

Egypt 11.3 7.5 319.5 10.4 

Jordan - - - 1.6 

Lebanon - 27.2 40.3 22.9 

Morocco 32.9 104.2 193.7 11.7 

Tunisia 1.3 90.7 - 5.9 

Turkey 6.4 16.2 231.0 11.9 


MENA Domiciled Fund Assets by Type 

(millions of U.S. dollars, end of period, June 2012) 

45,000 

40,000 

35,000 

30,000 

US$ million 

25,000 

20,000 

15,000 

10,000 

5,000 

- 

Equity 

Fixed 

Income 

Money 

Market 

Other 


51


Average Fund Assets by Type 


250 

200 

US$ million 

150 

100 

50 

- 

Equity Fixed Income Money 

Market 

Other 


52


Industry Perspective 

Farah Foustok – Chief Executive Officer 

ING Investment Management Middle East 

Chairman – Financial Services 

Association UAE 

Q/ Please describe your firm’s 

activities in the GCC region asset 

management industry - a) Description of 

parent company b) History c) Size: 

funds/portfolios d) Organizational set-up 

e) Investor profile 

A/ a) ING Investment Management (ING 

IM) is a global asset manager with 

approximately EUR293.2 bn (USD369.2 bn) 

in assets managed for institutions and 

individual investors worldwide. As the 

principal asset manager of ING Group, a 

global financial institution of Dutch origin, ING IM employs over 2,800 staff and is active 

in 25 countries across Europe, America, Asia and the Middle East. ING IM applies its 

proprietary research and analysis, global resources and risk management to offer a wide 

variety of strategies, investment vehicles and advisory services in all major asset classes 

and investment styles. In Europe and the Middle East, ING IM has offices in 15 countries 

and has Assets under Management of approximately EUR155.9 bn (USD196.3 bn) 3 

b) ING is the first Global Asset Manager firm to set up local managed investment 

strategies in the Middle East (2007) and cater for the growing global interest in this part 

of the world. ING Investment Management manages a strong MENA (Middle East & 

North Africa) equity strategy that is on top in peer group rankings. 

c) The MENA strategy manages in excess of USD300 million out of which the 

mutual fund accounts for USD41.21 million 

3 

Figures as of 30 June 2012. The financial results of the Asian Investment Management 

(IM) business are now included under ‘net result from discontinued operations’. In order 

to align with the reported results of the ‘ongoing’ operations, the total Assets under 

Management are reported excluding Asia. 

53


d) In Dubai, ING IM has an office of 18 employees, out of which there are 7 

professionals on the investment side, 4 covering sales and marketing, and the rest are 

back-office and office support. 

e) Investors are mainly institutional and are MENA-based, including SWFs, 

pension funds, family offices and other distribution channels. 

Q/ Please elaborate on your asset allocation by type and country. 

A/ 

Country Allocation % Holdings Industry % Holdings 

KSA 39.12 Banks 23.79 

UAE 25.13 Diversified Operations 12.07 

Qatar 18.40 Oil & Gas Services 11.60 

Kuwait 5.29 Healthcare Services 7.54 

Oman 4.02 Real Estate 6.89 

Jordan 2.54 Electric 6.43 

Morocco 2.53 Paper & Related Products 4.71 

Egypt 0.47 Building Materials 4.59 

Bahrain 0.34 Telecommunications 3.92 

Cash 2.15 Chemicals 3.60 

Total 100.00 Food 3.52 

. 

Mining 2.88 

Transportation 2.12 

Holding Companies 1.86 

Retail 1.83 

Textiles 0.47 

Cash 2.15 

Total 100.00 

54


Q/ Where and what investment opportunities do you specifically see in MENA/GCC 

at present ? Please elaborate. 

A/ The massive infrastructure spending of the GCC governments, supported by the 

accumulated foreign reserves and the budget surpluses of countries, will create a strong 

base for a sustainable growth in the region for the coming years. Taking into 

consideration the economic drivers and specifics of each country, the tickle-down effect 

into the different sectors from this spending will create opportunities to identify and to 

invest in. In line with this investment theory, Saudi Arabia stands out as an eventual 

investment destination, where the banking sector and the consumer-related sectors will 

be potential beneficiaries. The same investment case also stands in Qatar, with the FIFA 

World Cup 2020 being a major milestone to achieve, reinforcing the government’s 

spending programme. 

Q/ What have been trends in fees for your products ? 

A/ Fees for MENA Equities: 

For the ING MENA Fund the fees are: 

USD 

EUR 

Share Class P cap I cap I Dis S cap P cap P Dis X cap I cap S cap 


Fee 

1.5 0.85 0.85 0.6 1.5 1.5 2 0.85 0.6 

For mandates, the fees are based on the investment guidelines and restrictions. 

Q/ What were the trends in flows (in fund and portfolios; by asset category) in 

2011 ? in 2012YTD ? 

A/ The flows in 2012 in MENA Equities have been robust based on demand from GCC 

institutional clients. 

Q/ What factors were the drivers for the flows described above? 

A/ Combination of weak global growth, problems in the Euro Zone and the Arab spring 

has resulted in reduced risk appetite from global investors. However, we see the GCC 

institutional clients increasing their allocation in the region due to compelling valuations 

and strong economic fundamentals of the region. 

55


Q/ Which firms (local / international) do you consider to be your main competitors 

in the region? 

A/ There are many regional and global players in this space. However ING IM ING 

Group was one of the first global financial institutions with a regional Asset Management 

team based in Dubai. This team of investment professionals has in-depth knowledge and 

experience across various asset classes in the Middle East and North Africa region. This 

gives us an edge in a competitive landscape. 

Q/ What was the main driver of your choice for fund domicile ? 

A/ ING MENA Fund is domiciled in Luxembourg and is UCITS compliant. This is a 

globally recognized jurisdiction for funds. The comfort that this domicile provides to 

investors is critical for the sustainability of the fund during different market cycles. From 

our side, we like to adhere to the most regulated environment that safeguards our 

investors’ interests. 

Q/ Have any recent regulatory changes in the GCC region had any impact on your 

business ? 

A/ The regulatory framework is developing in the region alongside economic 

development, and governments are taking the right steps in this regard. One positive 

development on the regulatory front was the mortgage law that was passed in Saudi 

Arabia, and this should have a positive impact on the banking and real estate sectors.. 

Q/ What are your expansion plans ? 

A/ ING IM is looking to expand its coverage into Frontier Markets. This is in line with our 

strategy to assess what new areas our regional and international clients are seeking to 

invest in. We are also looking at a MENA High Dividend Fund and Global Petrochemical 

Fund to be part of our product offering. 

Q/ What is your global/regional investment outlook ? 

A/ Forecasts for 2013 should be seen as a ‘tug of war’ between the positive dynamics of 

monetary easing adopted by authorities, and the drags exerted by fiscal tightening and 

private sector deleveraging. The world is still very volatile, and imbalances make the 

economy very susceptible to shocks. But there will always be new shocks, and investors 

must remember to ride the cyclical waves. 

56


On a global level, ING Investment Management expects growth in 2013, despite a 

significant risk of market shocks. However, upside risks are clearly visible, but investors 

may miss out on this because their confidence is low. 

New research conducted with European institutional investors reveals that 85% have 

major concerns about a Eurozone collapse, with the second biggest threat being seen as 

a slowdown in China – something 40% of respondents are very concerned about. 

We predict World Real GDP growth of 3.3% for 2013, and anticipate growth in the US to 

fall slightly to 2% in 2013. Our estimates for the Eurozone and UK are 0.3% and 1.3% 

respectively. 

When considering emerging markets, ING IM anticipates GDP growth of 6% in 2013. For 

China, we estimate that the corresponding figures will be 7.6% to 7.8%, but this will slip 

to 6.5% in 2014. 

57



In 2012H1, MENA domiciled fund assets increased by 3% from end-2011 to US$ 

89.6 billion for funds tracked in the database. There were an estimated US$ 2.47 billion 

in net inflows to these funds. The increase was primarily attributable to a US$ 3.33 

billion increase in money market fund assets (conventional and sharia). Trade 

finance funds saw net inflows of US$ 564 million. Equity fund assets (including subtypes) 

fell by 2.9%, with net outflows of US$590 million. Largest 4 funds in MENA were 

money market funds. In 2011, MENA domiciled fund assets decreased by 13% from 

end-2010 to US$ 87.8 billion for funds tracked in the database. There were an 

estimated US$ 13 billion in net outflows from these funds. The decrease was primarily 

attributable to a US$ 6.9 billion decrease in money market fund assets. Trade 

finance funds saw net inflows estimated at US$ 526 million. Aggregate equity fund 

assets fell by 21.7%, with net outflows of US$ 5.5 billion. 

Estimated Fund Flows 


Fund Assets Fund Type Net Flows 

2011 2012H1 

6,508 7,073 Trade Finance 564 

456 569 Sukuk 113 

872 689 Sector (185) 

3,007 2,399 Other (609) 

32,119 34,897 Money Market 2,769 

28 44 IPO 15 

559 558 Index (1) 

333 494 Hedge Funds 159 

951 1,029 Fund of Funds 78 

21,758 21,840 Fixed Income 83 

396 355 Feeder (41) 

17,555 17,060 Equity (496) 

37 64 Capital Protected 28 

2,549 2,545 Balanced (5) 


58



(millions of U.S. dollars, 2011) 

Fund Assets Fund Type Net Flows 

2010 2011 

5,980 6,508 Trade Finance 526 

428 456 Sukuk 26 

2,212 872 Sector (1,340) 

1,497 3,007 Other 1,510 

39,569 32,119 Money Market (7,435) 

97 28 IPO (72) 

615 559 Index (51) 

283 333 Hedge Funds 52 

994 951 Fund of Funds (42) 

22,424 21,758 Fixed Income (665) 

807 396 Feeder (403) 

21,570 17,555 Equity (4,009) 

34 37 Capital Protected 3 

3,666 2,549 Balanced (1,115) 


Top 20 MENA Mutual Funds by Assets 


Fund Name Type Sponsor AuM 

1 AlAhli Saudi Riyal Trade Fund Money Market NCB Capital 3,464 

2 Beltone Banque Misr Money Mkt EGP Money Market Beltone Fund Man. 2,799 

3 SAR International Trade Finance Trade Finance Samba Cap & Inv. 2,539 

4 Al Rajhi Capital SAR Commodity Money Market Al Rajhi Capital 2,102 

5 Yapi ve Kredi Bank B Type Liquid Money Market Yapi Kredi Portfoy 1,872 

6 Is Bank B Type Liquid Money Market Is AM Inc 1,783 

7 AlAhli Diversified SAR Trade Money Market NCB Capital 1,647 

8 Garanti Bank B Type Apple Liquid Money Market Garanti Asset Mgt 1,393 

9 Al Ahly National Bank of Egypt IV Money Market Nat’l Bank of Egypt 1,292 

10 Capital Obligations Plus Fixed Income BMCE Capital Ges 1,279 

11 Akbank B Type Liquid Money Market Ak AM 1,215 

12 Oblifutur Fixed Income Wafa Gestion SA 1,167 

13 Attijari Tresorerie Money Market Wafa Gestion SA 1,163 

14 CIB Money Market Fund (Osoul) Money Market Commercial IntlAM 1,149 

15 CDG Prevoyance Fixed Income CDG Capital Gest 1,012 

16 EFG Nat’l SocGen Bank Themar Money Market National Societe 969 

17 RMA Cap Dynamique Equity RMA Capital S.A 825 

18 Irad Money Market BMCE Capital Ges 814 

19 TR Vakiflar Bankasi B Type Liquid Money Market Vakif Yatirim 770 

20 HSBC Amanah Saudi Equity Fund Equity HSBC S. Arabia 731 

Source: Lipper Rankings, Lipper, a Thomson Reuters Company 

59


Equity Funds 

In 2012H1, equity fund assets declined by 2.9% driven by market movements. 

Equity funds witnessed net outflows of US$ 590 million. Sector funds witnessed net 

outflows of US$ 185 million and assets under management decreased by 21%. IPO fund 

assets increased by 57.4%. Index fund assets decreased by 0.2% and registered US$ 1 

million in net outflows. In 2011, equity fund assets decreased by 21.7%. Equity funds 

witnessed net outflows of US$ 5.5 billion. Sector funds witnessed net outflows of US$ 

1.34 billion and assets under management decreased by 60.6%. IPO fund assets 

decreased by 71%. Index fund assets decreased by 9.1% and registered US$ 51 million 

in net outflows. 

Top 20 MENA Equity Funds by Assets 


Rank Fund Name Type Sponsor AuM 

1 RMA Cap Dynamique Equity RMA Capital S.A 825 

2 HSBC Amanah Saudi Equity Equity HSBC Saudi Arabia Ltd 731 

3 Riyad Equity Fund 3 Equity Riyad Capital 624 

4 Al Raed Saudi Equity Fund Equity Samba Cap & Invest Mgmt 548 

5 Al Raed Fund Equity Kuwait Investment Company 515 


7 Al Wataniya Investment Fund Equity National Investments Co. 479 

8 AlAhli Saudi Trading Equity Equity NCB Capital 423 

9 International Fund Equity Riyad Capital 421 

10 RiyadC-European Growth Fund Equity Riyad Capital 418 

11 Investment Stabilization Equity BankMuscat SAOG 323 

12 Markaz Investment and Develop Equity Kuwait Financial Centre 309 

13 Burgan Equity Fund Equity Burgan Bank 276 

14 American Stock Fund Equity Riyad Capital 269 

15 AlAhli Global Trading Equity Fund Equity NCB Capital 259 

16 CDG-Actions Equity CDG Capital Gestion 248 

17 Wafa Assurance Optimisation Equity Wafa Gestion SA 241 

Schroder International Selection Schroder Investment 

18 Equity 

Frontier Markets Equity Fund 

Management Limited 

229 

19 Qatar Investment Fund PLC Equity Epicure Managers Qatar 199 

20 Markaz Mumtaz Investment Equity Kuwait Financial Centre 197 


60


Top 10 MENA Index Funds by Assets 



1 Global 10 Large Cap. Index Fund Index Global Investment House 258 

2 Invest AD - UAE Total Return Index Invest AD 80 

3 ADCB Arabian Index Fund Index Abu Dhabi Commercial Bank 53 

4 Sanaya Dow Jones Kuwait Index Index Industrial and Financial Inv. 37 

5 ADCB MSCI UAE Index Fund Index Abu Dhabi Commercial Bank 27 

6 BankMuscat S&P GCC LargeCap Index BankMuscat SAOG 25 

7 HSBC Amanah Global Equity Index HSBC Saudi Arabia Limited 14 

8 Al Madar US Index Fund Index Al Madar Finance & Inv. Co. 14 

9 Al Muthanna Islamic Index Fund Index Al Muthana Investment Co. 13 

10 HSBC Amanah Commodity Index Index HSBC Saudi Arabia Ltd. 13 


61


Fixed Income Funds 

In 2012H1, fixed income fund assets increased by 1% with net inflows of US$ 195 

million. Sukuk funds saw net inflows of US$ 113 million, while conventional bond funds 

saw net inflows of US$ 83 million. 

In 2011, fixed income fund assets decreased by 2.8% with net outflows of US$ 638 

million. Sukuk funds saw net inflows of US$ 26 million, while conventional bond funds 

saw net outflows of US$ 665 million. 

Top 20 MENA Fixed Income Funds by Assets 



1 Capital Obligations Plus Bond BMCE Capital Gestion SA 1,279 

2 Oblifutur Bond Wafa Gestion SA 1,167 

3 CDG Prevoyance Bond CDG Capital Gestion SA 1,012 

4 FCP Emergence Capital Bond Capital Gestion Group 676 

5 RMA Cap Obligations Bond RMA Capital S.A 556 

6 Sicav Tresor Bond Biat Asset Management 526 

7 CAP Obligations Bond Wafa Gestion SA 467 

8 Al Amal Bond Al Istitmar Chaabi SA 423 

9 CDG Barid Bond CDG Capital Gestion SA 411 

10 Wafa Assurance Securite Bond Wafa Gestion SA 386 

11 FCP Liquidites Bond CDG Capital Gestion SA 386 

12 CDG Oblig Plus Bond CDG Capital Gestion SA 362 

13 Blom Bond Fund Bond Blominvest Bank 345 

14 Sicav Prevoyance Bond Wafa Gestion SA 339 

15 Emergence Bond Bond Capital Gestion Group 316 

16 Placement Obligataire Sicav Bond BNA Capitaux 312 

17 CDG-Secur Bond CDG Capital Gestion SA 310 

18 Tunisie Sicav Bond Tunisie Valeurs S.A 309 

19 Oblitop Bond Wafa Gestion SA 307 

20 CIMR Ajial Bond Wafa Gestion SA 301 


62


Focus: MENA Fixed Income – Is It All Over? 

Mark Watts, CFA – Head of Fixed Income 

Asset Management Group 

National Bank of Abu Dhabi 

As 2012 drew to a close, a chorus of voices grew 

increasingly loud, all signing from the same hymn 

sheet of ‘It’s all over for bonds’. The lyrics are 

seductive, the tempo is attractive, but there is 

something definitely out of tune with the story. 

To address the question ‘is it all over?’ you have to first examine what drives the bond 

market in the MENA region. The bond market is a function of two key variables and 

these variables drive most of the returns. The first is the risk free yield curve and the 

credit spread. For our market, the risk free curve is deemed to be the US Treasury curve. 

Purists may argue that the US curve is no longer risk free with the US having lost its 

coveted ‘triple A’ moniker last year, but the fact is that US Dollar credit is priced off the 

US curve and there is no credible alternative. All the time that MENA based entities issue 

in US Dollars, the market will price off the US Dollar curve. 

So what is the outlook for the US curve? 

Take a look at the 100 year chart of US Treasuries. Those who say it is all over tend to 

look at this as the defining chart, ‘rates have never been lower’ they cry, ‘the only way is 

up’. But experience of Japan in the late 90s has taught me that just because something 

is expensive, it doesn’t mean it will get cheap. What is missing is a catalyst and I would 

argue that we have just had the reverse. The yield curve is the term structure of interest 

rates and as such mathematically begins with short rates. The very same short rates that 

the Federal Reserve has just told us will not be moving until at least 2015. The short end 

is therefore effectively pinned at close to zero. The same Fed has also told us that it is 

going to continue to pump money into the US until they see signs of growth and 

employment (one of the last things to move). All well and good, but no one seems to 

have told the banks what to do with the money, so in the absence of a vibrant economy 

and faced with corporates who do not want to borrow, these funds find their way into 

financial markets (the money multiplier being currently broken). So the Fed is buying the 

63


curve and the money that they put into the hands of the holders of US debt also buy the 

curve, thus squeezing yields lower and forcing others out of lower yielding assets and 

into higher yielding assets. Post the last Fed announcement of QE ‘Infinity’, Treasuries 

have actually rallied. The Japanese experience tells us that rates can, and will, stay low 

for much longer than people expect. 

Credit spreads have different drivers but are, nonetheless, linked by global capital flows 

and the search for yield. MENA region bonds have a number of things going for them 

today: 

1. Abundant global liquidity (see above) 

2. Abundant local liquidity driven in the main by conservative fiscal assumptions 

as to the oil price in 2012 that are at odds with the far higher actual outcome. This has 

left the regional economy in a relatively healthy position. 

3. Extensive infrastructure and social spending – as economies in the region 

continue to develop their infrastructure and continue to respond to the social needs of 

their domestic populations, spending remains robust. The government’s involvement in 

the regional economy allows the region to stand out from the competition (Europe and 

the US), and allows smart managers to allocate capital to a region that is simply doing 

something different. 

4. We are still cheap – as I have been saying for a number of years now, market 

segmentation and a fundamental misunderstanding of the market by people who do not 

live in the region keep our credit on the cheap side. It started with the hangover from the 

2008 crisis which took a while to dissipate (and in some credits still hasn’t, providing 

opportunities), and continues with the lack of understanding about the strategic nature of 

certain credits to the underlying economy and the support that they are likely to receive 

in the event of a problem. 

In short, there is still much to play for in MENA region bonds, the orchestra tuned up long 

ago and we are in the second, or perhaps third movement of the symphony. The market 

is still poorly understood, underallocated globally, and inefficiently researched. Put that 

together and it shows us that there is still alpha to be captured by managers who are 

resourced, on the ground, and know their markets and their craft intimately. The 

symphony shows no sign of ending yet. 

Mark Watts, CFA is the Head of Fixed Income in Asset Management Group at National 

Bank Abu Dhabi. The views expressed are his own and not those of the bank. 

64


Money Market Funds 

In 2012H1, fund assets under management in this category increased by 8.7%. 

Estimated net inflows from money market funds stood at US$ 3.33 billion. Within 

this category, trade finance funds saw estimated net inflows of US$ 564 million (fund 

assets under management increased by 8.7%), while conventional money market funds 

saw net inflows of US$ 2.77 billion (with fund assets under management increasing 

8.6%). In 2011, fund assets under management in this category decreased by 

15.2%. Estimated net outflows to money market funds stood at US$ 6.9 billion. Within 

this category, trade finance funds saw estimated net inflows of US$ 526 million (fund 

assets under management increased 8.8%), while conventional money market funds 

saw outflows of US$ 7.4 billion (with fund assets under management decreasing 18.8%). 

Top 20 MENA Money Market Funds by Assets 




2 Beltone Banque Misr Money Mkt Money Market Beltone Fund Mgmt 2,799 

3 SAR International Trade Finance Trade Finance 

Samba Cap & Invest 

Mgmt 

2,539 


5 Yapi ve Kredi Bank B Type Liquid Money Market Yapi Kredi Portfoy 1,872 

6 Is Bank B Type Liquid Money Market Is Asset Management 1,783 

7 AlAhli Diversified SAR Trade Trade Finance NCB Capital 1,647 

8 Garanti Bank B Type Apple Liquid Money Market 

Garanti Asset 


1,393 

9 Al Ahly National Bank of Egypt IV Money Market National Bank of Egypt 1,292 

10 Akbank B Type Liquid Money Market Ak Asset Management 1,215 

11 Attijari Tresorerie Money Market Wafa Gestion SA 1,163 

12 CIB Money Market Fund (Osoul) Money Market Commercial Intl AM 1,149 

13 EFG Nat’l SocGen Bank Themar Money Market National Societe 969 

14 Irad Money Market BMCE Capital Gestion 814 

15 TR Vakiflar Bankasi B Type Liquid Money Market Vakif Yatirim 770 

16 Garanti Bank B Type Liquid Money Market 

Garanti Asset 


722 

17 FCP Alistitmar Chaabi Tresorerie Money Market Al Istitmar Chaabi SA 681 

18 Al Razeen Riyal Fund Money Market 


Mgmt 

598 

19 Is Bank B Type Maximum Liquid Money Market Is Asset Management 594 

20 HSBC Amanah SAR Trading Trade Finance HSBC Saudi Arabia Ltd 569 


65


Focus: Fund Management in the Middle 

East 

Chirag Shah – Head of Strategy and 

Corporate Development – 

Dubai International Financial Centre 

Authority 

Historically, high oil prices have led to an 

accumulation of wealth within the Middle 

East. For a long time, this wealth was 

managed by wealth managers based in 

jurisdictions such as London, New York 

and Geneva. 

The penetration of the fund management 

industry is still low in the Middle East, 

when compared to international markets. 

Mutual funds’ Assets Under Management 

(AUM) is around 2.5% of market capitalisation, which underlines the opportunity for 

growth since similar indicators in developed markets lie above the mid-way mark; with 

the growing knowledge and sophistication of the industry, huge potential is available to 

both international and local players. In the last decade AUM in the MENA region has 

tripled and the number of fund managers has quadrupled, demonstrating the rapid 

growth in this segment. The need for infrastructure development in the ME in areas such 

as transportation, logistics, education and health is expected to create investment 

opportunities in such a booming market. 

Unsurprisingly, the MENA region experienced the highest growth in asset pools globally 

to reach USD 1.9 trillion in 2010. This has attracted increasing numbers of international 

players into the region. These have been either through directly establishing subsidiaries 

in the Middle East or representative offices to conduct initial marketing and development 

activity. Many firms have also worked with regional players to collaborate on sharing best 

practices in return for local market understanding and distribution networks. 

It is common knowledge that the MENA region is home to 9 of the top 20 SWFs in the 

world, with assets totaling around USD 2 trillion. This has created many opportunities, 

66


not only for selling investment vehicles to these bodies by asset managers, but also for 

those firms which provide fund administration, custody and other support functions. 

The growing regional wealth across MENA has also played a major part in creating 

demand for wealth management products. The MENA HNWI segment is around 6 million 

people with around USD 2.8 trillion wealth growing by 3% annually. It is estimated that 

50% of HNWI wealth is held in Switzerland and the UK by bankers based in these 

jurisdictions. However, there has been a reversal in the trend; we have seen many 

private banks double shares in assets held from the region from 10% in 2000 to 25% in 

2010. As a result, more foreign private banks continue to establish their presence in the 

region to cater to the needs of the HNWI segment. 

Another key aspect and area of opportunity for firms is the embryonic Islamic fund 

management industry. The Islamic fund industry, which is driven from the MENA region, 

has a value of around USD 55 billion, with potential to reach USD 480 billion. The 

opportunity for international asset managers to sell funds structured on Shariah 

compliant assets creates an opportunity for global players to use their experience in 

collaboration with the Shariah driven principles of local banks. 

Alternative asset classes have shown a rapid increase, with Private Equity (PE) in MENA 

growing 15 times to USD 15-18 billion in the last decade. Investment projects include 

state run enterprises such as real estate, infrastructure and power. As the investment in 

these sectors increase, a need is created to bring in industry management and expertise 

from global players. 

Why the DIFC? 

The DIFC provides a secure and efficient platform for businesses and financial 

institutions to reach in to and out of the emerging markets of the area, playing a pivotal 

role in meeting the region’s growing financial needs. Dubai is an ideal hub and regional 

gateway for the asset management industry. DIFC provides a stable and secure platform 

to access the entire Middle East and Africa region. It also provides a time zone 

advantage enabling multiple hours of communication with the U.S, Europe and Asia. 

Within an 8 hour flying time, one can cover most major destinations in the world and twothirds 

of the world’s population. 

67


1) DFSA Fund Regulation Highlights 

DFSA has 58 bilateral and 3 multilateral Memoranda of Understanding in place 

with regulatory authorities and organisations worldwide (recognised by UK’s 

FSA, US Federal Reserve & member of IOSCO, IAIS & BOCA) 

A dedicated set of laws and rules pertaining directly to both Fund Managers 

and Fund Vehicles which include: 

o Legal incorporation and segregation requirements in place for both 

Fund Managers and Fund Vehicles with a variety of structures 

including Company, Partnership & Trust formations 

o Domiciliation choice in terms of Fund and Fund Vehicle, namely the 

Fund Manager and Fund need not both be domiciled in the DIFC 

o A flexible regime allowing for both Public (Retail) and Exempt 

(Wholesale/Institutional/High net Worth Professional Clients) Funds, 

with varying levels of regulation recognizing investor sophistication 

and wealth 

o Specialist Fund requirements in place to cater for alternative fund 

types and structures. i.e. Hedge, Property, Private Equity, Islamic, 

Master/Feeder, Umbrella, Fund of Funds, et cetera 

o International auditing and investor reporting standards 

o DIFC domiciled Authorised Market Institutions (regulated exchange), 

facilitating the listing of Fund Vehicles locally if required 

o Other international standard fund related regulatory requirements, 

as commonly seen in other internationally recognised jurisdictions 

o A competitive fee structure for both Fund Managers and Fund 

Vehicles 

2) Unique platform for Alternative Investment 

Strong cluster of asset management firms present in the financial centre 

3) DIFC infrastructure supports 

Domiciling, distribution, administration, management, and ancillary services - a 

variety of Financial Service firm types in the DIFC which complement each 

other e.g. distribution, asset management, administration services, as well as 

ancillary service providers i.e. accountancy services/ auditors and lawyers. 

Exchange Traded Products, Fund of Funds, Hedge Funds, Private Equity 

Funds, Real Estate Funds, Islamic Funds in Open/Closed Structures 

NASDAQ Dubai the ideal platform for floatation 

Developed infrastructure e.g. centrally accessible location with road and rail 

(metro) networks, parking facilities and modern offices with modern 

telecommunications / IT infrastructure. Many established and varied retail 

outlets e.g. restaurants, coffee shops, pharmacies, print shops, et cetera. 

4) DIFC as a platform for Private Banking 

 

‘One stop shop’ to service regional HNWI clients 

68


 

 

Suitable regulatory environment to distribute sophisticated niche products such 

as structured products, derivatives and ETPs, alternative investments 

including Hedge & Private Equity Funds, et cetera 

Presence of large regional banks in DIFC provides distribution opportunities, 

such as ‘white labeling’ 

5) Tax Efficiencies 

 

 

DIFC has a zero percent tax rate on corporate income and profits (guaranteed 

for 50 years) 

UAE's wide network of DTAs with 50+ countries 

6) Hub & Spoke Model 

 

DIFC platform to centralise regional/global management of activities, book 

assets, products structuring, development and roll-out to branches around the 

world 

7) Free Capital Convertibility and Movement 

 

 

No exchange controls 

Dollar denominated environment 

8) Subsidiaries and Incorporated Entities 

 

 

 

100% foreign ownership 

Wide range of legal structures out of which entities can chose to establish 

Facility for representative office license 

9) Legal Framework 

 

 

 

 

 

Common law framework and court system, the DIFC Courts 

Independent administration of justice from UAE 

Laws drafted in English with internationally renowned bench of judges 

Allows for matters to be heard within the DIFC Courts or in a court in another 

recognised jurisdiction 

Provides dispute resolution services, including arbitration and mediation 

10) Deep cluster of service providers and financial services firms 

Sizeable number of professional services firms, including top global legal 

firms, big four accounting firms, consultants and recruitment firms 

8 of the top 15 legal firms present in the DIFC 

4 of the top 5 accounting firms present in the DIFC 

890 companies operate from the centre including 333 regulated firms. This 

includes 17 of the top 25 Banks, 10 of the top 20 Money Managers and 8 of 

the top 10 insurance companies. 

69

GCC Region Trends

Gulf Cooperation Council Region 

Regional Economic Developments 

Record average oil price and sales 

Oil exporting economies continue to do well given historically high oil prices and 

production levels. Dubai crude is projected to average US$ 108.5/bl in 2012 which will 

be the highest on record after an average of US$ 105.5/bl in 2011. While the average 

figures are below the high of US$ 140/bl registered on July 7th, 2008, the overall 

average for 2008 had actually been US$ 94/bl. GCC crude oil production is estimated to 

average 16.9 million bpd in 2012 - highest annual average figure on record. High oil 

prices will allow GCC to accumulate international assets and retain their usual role of 

being capital exporters. GCC is forecast to register a current account surplus of 22.9% in 

2012 and 18% in 2013. 

GCC is forecast to post a fiscal surplus of US$ 177.2 billion in 2012 (12% of GDP), up 

from US$ 153 bn in 2011. GCC fiscal surplus is forecast at US$ 124 billion in 2013 (8.2% 

of GDP). Two GCC member states are expected to account for the bulk of the GCC 

surplus. These are Saudi Arabia and Kuwait. Bahrain is expected to register a deficit. 

GCC real GDP growth rate is forecast to decelerate to +4.3% y-o-y in 2012 from +6.7% 

y-o-y in 2011. Growth is expected to slow down further to +3.9% y-o-y in 2013. This is 

primarily based on a slowdown in oil output growth. GCC hydrocarbon sector output 

growth is estimated at +3.8% y-o-y and +1% y-o-y in 2012 and 2013, respectively (down 

from +7.8% y-o-y in 2011). Non-oil output is projected to grow by +4.5% y-o-y and +5.3% 

y-o-y, respectively, in the same period (+5.9% in 2011). By country, we estimate that 

Saudi Arabia and UAE will account for 42% and 27% of the rise in GCC real GDP growth 

in 2012, respectively. Qatar is expected to account for about 12% of GCC real GDP 

growth, down from 25% in 2011 as its ramp up of gas production ends. Nominal GDP is 

expected to rise in all GCC economies in 2012. Forecasts indicate that GCC nominal 

GDP will be roughly US$ 1.44 trillion in 2012 and circa US$ 1.5 trillion in 2013. Estimates 

indicate that the GCC will be the 13th largest economy in the world in 2012, up by one 

notch from 2011 and overtaking Spain. 

73



Official aggregate GCC fund industry data are still not readily available. Bahrain, Kuwait, 

Qatar, and Saudi Arabia publish some official data on the mutual fund industry in those 

countries. Saudi Arabia has the largest domestic fund industry, but Bahrain, Kuwait, and 

United Arab Emirates are also home to a large number of investment companies and 

asset managers. 

Mutual Fund Numbers and Assets – Official Data 

(US$ million where relevant, 2011 except where indicated otherwise ) 

Year 

Domestic 

Funds 

Number of 

Foreign 

Funds 

Total 


Domestic Funds 

Domestic 

Funds 


Foreign 

Funds 

Total 

Bahrain 2011 127 2,711 2,838 101 4,983 3,395 8,378 

Kuwait* 2011 111 

117 

(2009) - 54 5,797 8,215 14,012 

Oman - - - - - - - - 

Qatar** 2011 9 - - 3 2,940 - - 

S. Arabia 2011 239 - - - 21,918 - - 

UAE - - - - - - - - 

DIFC-UAE 2011 3 1,804 1,807 - 309^ 2,400^ 2,709^ 

Source: Central Banks *In Kuwait, fund asset data are from Central Bank 

statistical bulletins – these differ significantly from those reported in the Central 

Bank Economic Bulletin. 

** Figure provided indicates funds under 

management at entities supervised by Qatar Central Bank. Data from non-Central 

Bank sources are not comprehensive and indicative only. ^September 2012 

At the end of June 2012, this survey identified 522 funds (with assets of US$ 34.5 

billion) that comprise its dataset and includes locally domiciled funds, local company 

sponsored funds irrespective of domicile, and funds with the GCC or one of the 

constituent markets as their geographic focus. The dataset covers 421 locally domiciled 

funds (assets under management US$ 31.54 billion), and 307 funds with the GCC or one 

of the constituent markets as their geographic focus (assets under management US$ 

28.2 billion). In terms of locally domiciled funds, Saudi Arabia accounted for 60% of the 

count, but 74% of assets based on the selected data (solely indicative given its 

74


incomplete nature). At end-2011, this survey identified 523 funds in its dataset (with 

assets of US$ 33.2 billion), 432 locally domiciled funds (assets under management 

US$ 30.3 billion), and 318 funds with the GCC or one of the constituent markets as their 

geographic focus (assets under management US$ 27.31 billion). 

Number of Mutual Funds in Dataset* 


Locally 

Incorporated 

Funds 


Funds (incl. 


Funds by 

Geographic 

Focus 

Bahrain 42 15 1 

Kuwait 65 84 52 

Oman 12 19 7 

Qatar 9 13 12 

S. Arabia 250 243 145 

UAE 43 96 19 

GCC 71 

MENA 85 

Source: Lipper, a Thomson Reuters Company *Should be considered incomplete 

and solely indicative. For example, in 2011, Bahrain had 127 locally incorporated 

funds, 61 locally sponsored funds, and 1 with Bahrain as its geographic focus 

according to the Central Bank of Bahrain, while the dataset here for Bahrain only 

includes 42 and 15 funds, respectively for which factsheets could be obtained. 

Changes in the regulatory environment in UAE has led to domicile changes 

Locally incorporated funds are those that are domiciled in the relevant country. Local 

companies, however, also sponsor funds that are domiciled elsewhere (ranging from 

Bahrain, Bermuda, Cayman Islands, Channel Islands, Ireland, Isle of Man, Luxembourg, 

and Virgin Islands). According to the sample data, locally sponsored funds (irrespective 

of domicile) were fewer in number than locally domiciled funds in Saudi Arabia, for 

instance, indicating the presence of a number of funds launched by subsidiaries of 

foreign entities operating there. On the opposite side of the spectrum, UAE domiciled 

funds are relatively few in number, while the number of funds - irrespective of domicile - 

sponsored by asset managers based in the UAE remain higher. Recent changes in 

regulations in the UAE are causing fund sponsors to review fund domiciles. The 

changes may lead to a shift away from “non-equivalent” jurisdictions to 

“recognised jurisdictions” and onshore. 

75


Assets of Domestic Funds, Locally Sponsored funds, and Funds by Geographic 

Focus 


Locally 

Incorporated 

Funds 


Funds (incl. 


Funds by 

Geographic 

Focus 

Bahrain 1,392 195 18 

Kuwait 4,880 5,701 4,501 

Oman 507 544 404 

Qatar 157 599 339 

Saudi 

Arabia 

23,418 23,293 18,996 

UAE 1,180 2,521 760 

GCC - - 3,140 

MENA - - 2,421 


Country Breakdown of Locally Domiciled Mutual Funds 




UAE 

10.2% 

Bahrain 

10.0% 

Kuw ait 

15.4% 

Om an 

2.9% 

UAE 

3.7% 

Bahrain 

4.4% 

Kuw ait 

15.5% 

Om an 

1.6% 

S. Arabia 

59.4% 

Qatar 

2.1% 

S. Arabia 

74.3% 

Qatar 

0.5% 


76


Average Assets of Domestic Funds, Locally Sponsored funds, & Funds by 

Geographic Focus 


Locally 

Incorporated 

Funds 


Funds (incl. 


Funds by 

Geographic 

Focus 

Bahrain 33.2 13.0 17.9 

Kuwait 75.1 67.9 86.6 

Oman 42.2 28.6 57.8 

Qatar 17.5 46.1 28.2 

S. Arabia 93.7 95.9 131 

UAE 27.4 26.3 40 

GCC - - 44.2 

MENA - - 28.5 


Equity funds the largest 

In 2012H1, equity funds remained the most numerous accounting for 75% of funds 

that are locally domiciled, followed by money market funds which made up 13.4% of the 

count. Equity and money market funds were the largest by assets under 

management, accounting for 46.4% and 46.6% of the total, respectively. 

In 2011, equity funds accounted for 74.5% of locally domiciled funds count that, followed 

by money market funds which made up 13.4% of the count. Equity funds were the 

largest by assets under management, accounting for 49% of the total, while money 

market fund assets made up 44.6% of the total, while both solely fixed income and other 

asset class funds were relatively negligible with 3.4% and 3.2% of total fund assets, 

respectively. 

77


Breakdown of Locally Domiciled Mutual Funds by Type 




Money 

Market 

13.4% 

Other 

6.0% 

Other 

3.1% 

Fixed 

Income 

6.2% 

Money 

Market 

46.6% 

Equity 

74.5% 

Fixed 

Income 

4.0% 

Equity 

46.3% 


Number of Mutual Funds by Domicile & Type 


Equity 

Fixed 

Income 

Money 

Market 

Other 

Bahrain 32 4 2 4 

Kuwait 47 5 6 7 

Oman 11 - 1 - 

Qatar 9 - - - 

S. Arabia 184 9 45 12 

UAE 29 8 2 2 


78


Assets of Mutual Funds by Domicile and Type 


Equity 

Fixed 

Income 

Money 

Market 

Other 

Bahrain 778 557 16 42 

Kuwait 3,880 287 307 406 

Oman 497 - 9.7 - 

Qatar 157 - - - 

S. Arabia 8,566 179 14,348 326 

UAE 724 227 7 221 


Locally domiciled fixed income fund assets are relatively small in Saudi Arabia 

In 2012H1, based on domicile classification, Saudi Arabia accounted for 59% of equity 

funds by number and 61% by assets. Bahrain accounted for 16% of fixed income funds 

by count, but 48% by assets, while Kuwait had 20% of the total fixed income funds by 

count, but 25% of total fixed income fund assets. Saudi Arabia dominated the money 

market funds category with 98% of total assets of such funds. These figures are 

also largely the same as those at end-2011. 

Breakdown of the Number of Locally Domiciled Funds by Type 


Bahrain Kuw ait Oman Qatar S. Arabia UAE 

Other 

Money Market 

Fixed Income 

Equity 

0% 20% 40% 60% 80% 100% 


79


Asset Breakdown of Locally Domiciled Mutual Funds by Type 


Bahrain Kuw ait Oman Qatar S. Arabia UAE 

Other 

Money Market 

Fixed Income 

Equity 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 


Average equity fund assets remain the highest in Kuwait, average fixed income fund 

assets highest in Bahrain, while Saudi Arabian money market funds have the highest 

assets per fund. 

Average Assets of Mutual Funds Investing in the Region by Type and Domicile 


Equity 

Fixed 

Income 

Money 

Market 

Other 

Bahrain 24.3 139.2 7.9 10.5 

Kuwait 82.5 57.5 51.1 58 

Oman 45.2 - 9.7 - 

Qatar 17.5 - - - 

S. Arabia 46.6 19.9 318.8 27.1 

UAE 25 28.4 3.7 110.7 


80


Locally Domiciled Fund Assets by Type 


16,000 

14,000 

12,000 

10,000 

US$ million 

8,000 

6,000 

4,000 

2,000 

- 

Equity 

Fixed 

Income 

Money 

Market 

Other 


Average Fund Assets by Type 


300 

250 

US$ million 

200 

150 

100 

50 

- 

Equity Fixed Income Money 

Market 

Other 


81


Focus: An overview of the asset management industry 

in Qatar 

Yousuf Al Jaida - Director of Strategic Development - 

Asset Management QFCA 

Although it is still at a relatively early stage in its 

development, the asset management industry in the GCC is 

evolving increasingly rapidly.This is particularly so in Qatar 

where there is significant growth potential for the industry 

and where a key focus of the QFC Authority is to 

increase assets under management in the country. 

It is important to understand the background to this strategic initiative. The Qatar 

Financial Centre (“QFC”) was established by the Government of Qatar in 2005. The QFC 

is an integral part of the country’s financial sector with a mandate from the government to 

consolidate and promote it by introducing world-class financial services. 

The contribution of the financial services industry is an important component of the Qatar 

National Vision 2030. The National Vision 2030 is an economic, social and cultural 

blueprint for the sustainable development of a knowledge-based economy. Financial 

services help the diversification away from an excessive dependence on hydrocarbons 

which the National Vision 2030 maps out. Good progress has already been made 

towards realizing the diversification goals of the National Vision; the Finance, Insurance, 

Real Estate and Business Services sector now contributes about 10% of Qatar’s GDP, 

making it one of the biggest sectors after hydrocarbons. 

Geographically, Qatar benefits from its location between the mature markets of the west, 

the emerging markets of the east and the increasing trade and capital flows between 

SAAAME (South America, Africa, Asia, Middle East) markets. Qatar is also well 

positioned for firms looking to tap into the wider GCC region, which has a combined GDP 

of about US$1.4 trillion. 

Against this back-drop, there are considerable opportunities for asset managers in 

Qatar. The country has one of the highest per capita incomes in the world, one of the 

82


highest proportions of millionaire households and one of the highest proportions of High 

Net Worth Individuals. It has a savings rate of about 49%, well above the Gulf average 

and around twice the global average. The population doubled to 1.7 million in the decade 

to 2010 and continues to increase quickly. 

And like many countries in the region, Qatar is implementing a very sizeable 

infrastructure investment programme with an estimated US$140 billion expected to be 

committed to infrastructure over the next five years. If one adds in the investment 

necessary to host the 2022 FIFA World Cup, project spending over the next decade will 

exceed US$200 billion. 

To ensure that firms can make the most of these opportunities, the QFC has built a 

favourable business environment which enables them to establish a physical 

presence in Qatar and the region. Business can be conducted inside or outside Qatar, in 

local or foreign currency. Uniquely, this allows businesses to operate both locally and 

internationally. With the ability to engage in both onshore and offshore business, QFClicensed 

firms have the chance to participate directly in one of the world’s most 

economically dynamic regions. 

Firms also benefit from the QFC Authority’s tax and ownership regime which includes: 

10% corporation tax on locally sourced profits; remittance of all profits outside 

Qatar;100% foreign ownership; a self-assessment regime and advance transaction ruling 

scheme; tax incentives for the asset management, reinsurance and captive industries; 

zero personal income tax; and an extensive network of double taxation treaties 

negotiated with other countries. 

Regulation is another important element of the QFC’s appeal to asset managers. The 

QFC offers a world class regulatory regime, modelled on international best practice, and 

a legislative framework based on English common Law. It has an independent judiciary 

(the Qatar International Court and Dispute Resolution Centre), an independent 

regulatory authority (the QFC Regulatory Authority), and an independent tribunal (the 

QFC Tribunal) to hear appeals against decisions of QFC bodies. 

83


Moreover, the latest World Economic Forum Competitiveness Report ranked Qatar 

eleventh in the world - the highest ranking in the MENA region. 

What this overall framework provides firms with is clarity and certainty. An asset 

management business looking to establish itself within the QFC environment - whether it 

is local, regional or international - knows exactly where it stands. And clarity helps to 

breed certainty, which in these turbulent times is a valuable commodity indeed. This is 

fundamental because Qatar aims to be a domestic market, a regional market and a 

platform for global operations. 

84


Trends by Fund Type (flows based on GCC domiciled fund data) 

Investors withdrew money from funds in 2012H1 

In 2012H1, GCC domiciled fund assets increased by 4% from end-2011 to US$ 

31.53 billion for funds tracked in the database. There were an estimated US$ 1.15 

billion in net inflows to these funds. The increase was primarily attributable to a US$ 

1.14 billion increase in money market fund assets. Trade finance funds saw 

significant net inflows estimated at US$ 564 million. Equity fund assets fell by 1.7%, with 

net outflows of US$ 251 million. The largest 4 funds in the GCC were money market 

funds. 

Estimated Fund Flows (GCC Domiciled Funds) 

(millions of U.S. dollars, 2012H1) 

Fund Assets Fund Type AuM % Change Net Flows 


13,548 14,684 Money Market 8.4% 1,137 

1,016 1,252 Fixed Income 23.2% 235 

14,848 14,601 Equity -1.7% (251) 

966 995 Other 3% 27 


In 2011, GCC domiciled fund assets decreased by 15% to US$ 30.4 billion for funds 

tracked in the database. There were net outflows of US$ 2.24 billion in 2011. The 

decrease was primarily attributable to a US$ 2.75 billion decrease in money market 

fund assets. Trade finance funds saw net inflows estimated at US$ 526 million. Equity 

fund assets fell by 13.7% and experienced net outflows of US$ 2.34 billion. 

Estimated Fund Flows (GCC Domiciled Funds) 


Fund Assets Fund Type AuM% Change Net Flows 

2010 2011 

16,293 13,548 Money Market -16.8% (2,747) 

903 1,016 Fixed Income 12.5% 113 

17,201 14,848 Equity -13.7% (2,344) 

1,230 966 Other -21.5% (258) 


85


Top 20 GCC Mutual Funds by Assets 1 




SAR International Trade 

Samba Cap &Invest 

2 Trade Finance 

Finance 


2,539 

Al Rajhi Capital SAR 

3 

Commodity 

Money Market Al Rajhi Capital 2,102 

4 AlAhli Diversified SAR Trade Money Market NCB Capital 1,647 

5 HSBC Amanah Saudi Equity Equity HSBC Saudi Arabia 731 

6 Riyad Equity Fund 3 Equity Riyad Capital CJSC 624 

7 Al Razeen Riyal Fund Money Market 

Samba Cap &Invest 


598 

8 HSBC Amanah SAR Trading Money Market HSBC Saudi Arabia 569 

9 Al Raed Saudi Equity Fund Equity 

Samba Cap &Invest. 


548 

10 Al Raed Fund Equity Kuwait Investment 515 


12 Al Wataniya Investment Fund Equity National Investments 479 

13 Commodity Trading Fund SAR Trade Finance Riyad Capital CJSC 479 


15 International Fund Equity Riyad Capital CJSC 421 

16 SAR Money Market Fund Money Market Saudi Fransi Capital 421 

17 Al Mubarak SAR Trade Fund Trade Finance ANB Invest 420 

18 RiyadC-European Growth Fund Equity Riyad Capital CJSC 418 

19 Investment Stabilization Fund Equity Bank Muscat 323 

20 Markaz Investment & Develop. Equity Kuwait Financial Ctr 309 


Equity Funds 

In 2012H1, equity fund assets declined by 1.7%. Equity funds witnessed net 

outflows of US$ 251 million. Sector funds witnessed net outflows of US$ 85.4 million 

and assets under management decreased by 11.1%. IPO fund assets increased by 

57.4%. Index fund assets decreased by 0.4% and registered US$ 2.16 million in net 

outflows. 

1 

Rankings for GCC based companies’ funds. 

86


In 2011, equity fund assets decreased by 13.7%. Equity funds witnessed net outflows of 

US$ 2.34 billion. Sector funds witnessed net outflows of US$ 12.6 million and assets 

under management decreased by 1.5%. IPO fund assets decreased by 71%. Index fund 

assets decreased by 9.5% and registered US$ 50.5 million in net outflows. 

Top 20 GCC Equity Funds by Assets 



1 HSBC Amanah Saudi Equity Equity HSBC Saudi Arabia Ltd 731 


3 Al Raed Saudi Equity Fund Equity 



548 

4 Al Raed Fund Equity Kuwait Investment Co 515 


6 Al Wataniya Investment Fund Equity National Investments Co 479 



9 RiyadC-European Growth Equity Riyad Capital CJSC 418 

10 Investment Stabilization Equity BankMuscat SAOG 323 

11 

Markaz Investment and 

Development Fund 

Equity Kuwait Financial Centre 309 


13 American Stock Fund Equity Riyad Capital CJSC 269 

14 AlAhli Global Trading Equity Equity NCB Capital 259 

15 Qatar Investment Fund Equity Epicure Managers Qatar 199 


17 Asayel Fund Equity Al Bilad Investment Co 189 

18 Al Rajhi Local Shares Fund Equity Al Rajhi Capital 157 

19 Tijari Investment Equity CBK Capital 143 

20 Al Musahem Equity 



142 


87


Top GCC Sector Funds by Assets 



1 Samba Real Estate Sector Samba Cap & Invest Mgmt 251 

Zajil Services & 

2 

Telecommunications 

Sector National Investments Co. 97 

3 Al Atheer Sector Kuwait Investments Co. 39 

HSBC Saudi Petrochemical 

4 

Equity Opportunities Fund 

Sector HSBC Saudi Arabia Ltd. 37 

5 Masaref Investment Fund Sector Housing Finance Co. 35 

Global Energy Petrochem & 

6 

Downstream Ind. Fund 

Sector Global Investment House 34 

7 Al Muthana GCC Islamic Banks Sector Al Muthana Invest Co. 27 

8 MEFIC Real Estate Income Fund Sector 

Middle East Financial 

Investment Company 

26 

Al Rajhi Petrochemicals & 

9 

Cement 

Sector Al Rajhi Capital 18 


Top 10 GCC Index Funds by Assets 



1 Global 10 Large Cap. Index Index Global Investment House 258 

2 Invest AD - UAE Total Return Index Invest AD 80 


4 Sanaya Dow Jones Kuwait Index Index Industrial & Financial Invest. 37 

5 ADCB MSCI UAE Index Fund Index Abu Dhabi Commercial Bank 27 

6 BankMuscat S&P GCC LargeCap Index BankMuscat SAOG 25 

7 HSBC Amanah Global Equity Index HSBC Saudi Arabia Ltd 14 

Al Madar Finance & 

8 Al Madar US Index Fund Index 14 

Investment 

9 Al Muthanna Islamic Index Fund Index Al Muthana Investment Co 13 

10 HSBC Amanah Commodity Index Index HSBC Saudi Arabia Ltd 13 



In 2012H1, fixed income fund assets increased by 23.2%, with net inflows of US$ 

235 million. Sukuk funds saw net inflows of US$ 77 million, while conventional bond 

funds saw net inflows of US$ 158 million. 

88


In 2011, fixed income fund assets increased by 12.5%, with net inflows of US$ 113 

million. Sukuk funds saw net inflows of US$ 26.8 million, while conventional bond funds 

saw net inflows of US$ 87 million. 

Top GCC Fixed Income Funds by Assets 



1 Global Sukuk Plus Fund Sukuk Qatar Islamic Bank (UK) 213 

2 GIC Gulf Bond Fund Bond Gulf Investment Corp 160 

3 KIC Bond Fund Bond Kuwait Investment Co 150 

4 NBAD Cautious Income Fund Bond National Bank of Abu Dhabi 93 

5 Bond and High Yield Fund Bond KIPCO Asset Management 84 

6 Al Dana GCC Income Fund Bond Commercial Bank of Dubai 78* 

7 Emirates MENA Fixed Income Bond Emirates NBD AM 68 

8 HSBC Amanah Sukuk Fund Sukuk HSBC Saudi Arabia Limited 58 

9 Emirates Global Sukuk Fund Sukuk Emirates NBD AM 53 

10 Al Ahli USD Sukuk & Murabaha Sukuk NCB Capital 47 

11 Falcon Menasa Bond Fund Bond Falcon Private Bank 44 

12 Rasmala GCC Fixed Income Bond Rasmala Investment Bank 42 

13 Mashreq Al Islami Income Fund Sukuk Mashreq Capital 38 

14 Makaseb Income Fund Bond Makaseb 35 

15 Global Bond Fund Bond Global Investment House 27 

16 International Bond Fund Bond Riyad Capital CJSC 27 

17 InvestAD MENA Bond Fund Bond Abu Dhabi Investment Co 25 

Al Dana UAE Fixed Income 

18 

Opportunity 

Bond Commercial Bank of Dubai 24 

19 Al Hilal Global Sukuk Fund Sukuk Al Hilal Bank 22 

20 Jadwa Global Sukuk Fund Sukuk Jadwa Investment 18 

Source: Lipper Rankings, Lipper, a Thomson Reuters Company *Dec-2012 


In 2012H1, fund assets under management in this category increased by 8.4%. 

Estimated net inflows into money market funds were US$ 1.14 billion. Within this 

category, trade finance funds saw estimated net inflows of US$ 564 million (assets under 

management increased by 8.7%), while conventional money market funds saw net 

inflows of US$ 573 million (with fund assets under management increasing 8.1%). In 

89


2011, fund assets under management in this category decreased by 16.8%. 

Estimated net outflows from money market funds stood at US$ 2.75 billion. Within this 

category, trade finance funds saw estimated net inflows of US$ 526 million (fund assets 

under management increased by 8.8%), while conventional money market funds saw 

outflows of US$ 3.27 billion (with fund assets under management decreasing by 31.7%). 

Top 20 GCC Money Market Funds by Assets 



1 Al Ahli Saudi Riyal Trade Fund Money Market NCB Capital 3,464 

2 SAR Int’l Trade Finance Trade Finance Samba Capital 2,539 

3 AlRajhi Capital SAR Commodity Money Market Al Rajhi Capital 2,102 

4 Al Ahli Diversified SAR Trade Trade Finance NCB Capital 1,647 

5 Al Razeen Riyal Fund Money Market Samba Capital 598 

6 HSBC Amanah SAR Trading Trade Finance HSBC Saudi Arabia Ltd 569 




10 Al Dar Money Market Fund Money Market Al Dar Asset Mgmt 230 

11 Al Badr Murabaha Fund SAR Trade Finance Saudi Fransi Capital 225 

12 AlAhli International Trade Fund Money Market NCB Capital 199 

13 AlAhli Diversified USD Trade Trade Finance NCB Capital 182 

14 SAIB Trade Finance Fund Trade Finance SAIB BNP Paribas AM 180 

15 Al Yusr Saudi Riyal Murabaha Trade Finance Saudi Hollandi Capital 164 

16 Saudi Riyal Money Market Money Market Saudi Hollandi Capital 138 

USD International Trade 

Samba Capital & 

17 Finance 

Trade Finance Investment Mgmt 129 

18 

Al Qawafel Commodities 

Trading Trade Finance AlJazira Capital CJSC 113 

19 USD Commodity Mudaraba Trade Finance Al Rajhi Capital 95 

20 Riyadh Money Fund Money Market Riyadh Capital 89 


90



Sudarshan Malpani – Managing Director 

Sarasin-Alpen & Partners Limited 

Q/ Please describe your firm’s activities in 

the GCC region asset management 

industry - a) Description b) Size c) 

Organizational set-up d) Investor profile 

A/ Sarasin-Alpen & Partners Limited (SAPL) 

was incorporated in 2008 in the Dubai 

International Financial Centre as a specialist 

asset management firm. SAPL offers funds 

across equities and fixed income; in 

conventional and Sharia-compliant forms. 

SAPL draws on the skills and experience of 

two leading financial institutions; Bank 

Sarasin-Alpen (ME) Limited, Dubai and 

Sarasin & Partners LLP, London. Each institution owns part of Sarasin-Alpen & Partners 

and both are subsidiaries of the Swiss private bank, Bank Sarasin & Co Ltd 

b) As on 30-Sep-12, Sarasin-Alpen & Partners Limited managed assets of over 

USD 1 Billion mainly across Fixed Income funds. SAPL’s current product universe 

includes 5 types of funds including Fixed Deposit Funds, Indian Fixed Maturity Plans, 

Hybrid funds, a GCC Equity Fund and an Indian Equity Fund. 

c) SAPL leverages on the joint venture between Bank Sarasin-Alpen and Sarasin 

& Partners LLP utilizing the relevant skills and manpower that are readily available within 

the Sarasin Group. SAPL currently employs a Senior Executive Officer, 

Research/Product Manager and Operations/Service Manager in the DIFC and is also 

supported by a portfolio management team in UK 

d) SAPL’s investor base includes private clients as well as mandates from 

institutional clients across the region. 

91


Q/ What have been the main drivers of your choice for fund domicile? Have you 

made any changes to the domicile of your funds? 

A/ SAPL has established funds in Luxembourg, Cayman Islands and Mauritius that 

enable us to access investment opportunities in the Gulf and India. The drivers to choose 

these domiciles have been the following: 

• Well known jurisdictions and regulators with strong perception in minds of 

investors 

• Ease of set up and reporting requirements 

• Recognized access for specific investment opportunities 

Q/ What are the fee trends for your funds/portfolios? 

A/ Historically, management fees as well as performance fees are up to1.75% and 

performance fees depending on the asset class. Debt funds’ management fees are 

usually at the lower end of the range while equity funds are at the higher end and also 

attract performance fees. We have witnessed a reduction in management fees over the 

last three years predominantly in the fixed income space in order to deliver better yields 

in a falling interest rate environment. As for equity funds, we see that performance fees 

may be on their way out. 

Q/ What have been trends in flows ? 

A/ Fund inflows over 2011 and 2012 have been concentrated on fixed income and have 

been flowing from across the GCC. The inflows into equities have been much lower in 

comparison. 


A/ Given the largely conservative investor appetite, volatile equity markets and global 

macroeconomic and political uncertainties, SAPL focused on launching fixed income 

funds to meet our clients’ requirements. The majority of the fixed income funds launched 

were closed-products that generate returns by investing in a portfolio of fixed income 

instruments held across the GCC, South East Asia and India. 



92


A/ SAPL positions itself with institutions such as National Bank of Abu Dhabi, Emirates 

NBD Asset Management and Franklin Templeton Investments.. 

Q/ Do your funds have ratings from agencies such as S&P? 

A/ While our underlying fixed income investments are rated, our funds themselves are 

not rated and we do not foresee the need for the funds to be rated in the near future. 

Q/ What is the impact – if any - of recent regulatory changes on your business? 

A/ SAPL’s new initiatives and strategic plans are formulated keeping in mind the 

changing regulatory environment, including SCA’s Investment Fund Regulation. We are 

awaiting further clarification on the requirements for a clear direction. 


A/ SAPL has promising and exciting plans for 2013. We intend on launching new debt 

and equity funds with some unique inbuilt features. We are working towards expanding 

our team, distribution network and product universe in 2013. 

Q/ What is your investment outlook ? 

A/ Economic growth indicators are improving and point towards recovery. Global GDP 

growth is likely to have bottomed out and is expected to rebound from Q4 2012 on to H1 

2013. Aggressive central bank easing will remain in place globally with core inflation in 

the US and in Europe stable in the short term. Stable oil prices should keep inflationary 

pressures in check in the developed world and in Emerging markets. 

Political risks are likely to lead setbacks on the equity markets until the end of 2012 and 

equities should be cheaper as earnings growth slows. Despite numerous economic 

challenges, we expect 2013 to be good year for global equities on the back of low market 

interest rates, dearth of investment alternatives and robust corporate earnings growth. 

Emerging market equities are likely to rebound sharply in a growth acceleration phase. 

We expect encouraging movement in the Euro and foresee a number of positive 

developments that will reinforce a medium-term recovery of the euro zone. We believe 

that investors will look to gold as a safe haven surrogate currency, further reinforcing 

93


gold prices in 2013. We foresee higher bond yields in Q1 2013, however, we expect the 

recovery to fade out in H2 2013. 

We look forward to 2013 and urge investors, private and institutional, to make 

systematic, sustainability-oriented investments as their priority. This could not only 

generate far better returns. But will also help create a better World for us and the 

generations to come. 

94

Regulatory Trends 

Recent Regulatory Developments 

Bahrain 1 

Central Bank of Bahrain (CBB) released Volume 7 (Collective Investment Undertakings), 

a new Volume forming part of CBB Rulebook. The new volume provides comprehensive 

rules and regulations pertaining to the authorization / registration and supervision of 

mutual funds domiciled and/or offered for sale in Bahrain. The introduction of Volume 7 

followed an industrywide consultation that took place in October 2011 and incorporates 

the comments and feedback received. 

The amount of detail that has been added to the existing CIU regulations, and the fact 

that the area of mutual funds is increasingly attracting regional and international interest 

from specialized financial institutions that are actively involved in the structuring of 

mutual funds products, necessitated the issuance of the revamped regulations within a 

separate Volume and the new regulatory framework is aimed at enabling fund 

sponsors/managers and service providers to capitalize on the opportunities that best 

serve investors’ needs. 

When markets began to slowly recover after the financial crisis, investors immediately 

identified investment opportunities in the region and there was instant demand for new, 

innovative investment products. This, coupled by the fact that the mutual funds industry 

in Bahrain had matured to a certain extent, made it necessary for the CBB to undergo 

the exercise of revamping the regulatory framework of mutual funds, to keep pace with 

the current international and regional developments and best market practice. 

The CBB recognized the importance of expanding key areas such as the corporate 

governance framework, and the role and responsibilities of each relevant party to a fund. 

It also expands the variety of funds that can be established in Bahrain, by introducing 

rules and regulations governing Bahrain Real Estate Investment Trusts (B-REITs), in line 

1 

The section on Bahrain has been authored by Mazen Jawad, Compliance, MLRO & 

Internal Control Officer at National Bank of Abu Dhabi - Bahrain branch. 

97


with best international practices, yet tailored to serve the needs of the local and regional 

markets. 

Volume 7 additionally introduces rules for a newly established category called Private 

Investment Undertakings "PIUs". PIUs are a new breed of mutual funds with a high 

degree of flexibility in structuring, aimed to facilitate private investments, the like of club 

deals, single investor, family held investments or a single investment type. Due to the 

investment risk characteristics it may exhibit, such can only be initiated /offered to High 

Net-worth Individuals and Institutional investors. 

All CIUs’ authorised/ registered by the CBB prior to April 2012, are required to meet the 

provisions of Volume 7 by 31st December 2012, whereas, the rules are effective 

immediately for any newly established CIU. 

Kuwait 

Capital Market Authority issued amendments to fourteen articles and made two article 

additions to investment fund regulations on February 2012. The announcement provided 

until June 30, 2012 for adherence to new regulations. Some of the pertinent articles 

include a requirement for fund managers to maintain a 5% stake in funds being 

sponsored. The rules state that a fund cannot own more than 10% in a single security 

(although a quick glance at a Kuwait equity fund’s holdings as of October showed that 

actual allocation to a security continued to be in excess of this). The fee for marketing 

foreign funds was changed from 1% of value of investment units to KWD 50,000 payable 

on application and annual license renewal. 

Qatar 

A law providing for a body under the Qatar Central Bank to regulate banking, financial 

services, insurance was approved in December 2012. The unified regulatory structure 

covers the Central Bank, Qatar Financial Centre Regulatory Authority, Qatar Financial 

Markets Authority, and insurance regulatory functions. The unified regulatory structure 

98


had been under consideration for several years with the intent to have a single high 

standard regulatory environment across Qatar. 

In October 2012, CEO of Qatar Exchange pointed to exchange traded fund regulations 

that had been issued in the Summer, efforts to develop listing requirements for real 

estate investment trusts (REITs), and development of debt listings. He also raised a 

number of issues including regulations on securities lending and borrowing which were 

issued, the delivery versus payment system which had been introduced, marketmaking, 

and introduction of a free float requirement. Incidentally, these may together address the 

criteria for Qatar to be included in the MSCI Emerging Markets index. 

In August 2012, Qatar Financial Markets Authority issued custody licenses as part of 

measures to pursue financial sector reforms. 

Saudi Arabia 

In April 2012, Chairman of the Capital Market Authority stated that opening the 

Saudi Stock Exchange to foreigners was still within their strategy, but would be 

gradual. In 2011H2, Capital Market Authority and Saudi Stock Exchange (Tadawul) had 

circulated a draft plan to open up the stock market to foreigners. At present, foreigners 

can engage in total return swaps and participation notes and obtain the economic benefit 

of stocks without full ownership rights. Foreigners can also own mutual fund units that 

invest in Saudi Arabia including the exchange traded funds that trade on Tadawul. The 

draft rules propose per qualified foreign investor a maximum of 5% of capital for a stock. 

The direct foreign ownership limit proposed is 20% of a listed company’s capital. The 

direct and indirect foreign ownership (swaps, p-notes – non-GCC foreigners and foreign 

expatriates in Saudi Arabia) limit proposed is 49% of a company’s capital. The draft 

framework specifies qualified foreign investors as holding at least US$ 5 billion assets 

under management. 

In February, Saudi Arabia's regulator issued new guidelines for declaration of 

beneficiaries. It was reported that the move would help the regulator impose ownership 

limits when the market opens to foreigners using the Qualified Foreign Institutional 

99


Investor approach. It was also noted that this would enhance investor protection in case 

of broker default. 

United Arab Emirates 

New investment fund regulations by the Securities and Commodities Authority 

(SCA) were published in the official gazette on August 26, 2012. A grace period of 

one year was provided for existing funds to meet new regulations. SCA had initially 

published a draft in early 2011 and invited feedback. SCA revised the draft following 

feedback from industry participants, but the crux of the initial text remained intact. Some 

pertinent changes in the final version from the initial one were the following: 

In article 4, clause 4, a lower percentage co-investment requirement of 3% instead of the 

earlier proposal of 10% – “the company must invest in each local mutual fund it 

establishes by at least (3%) of the fund’s capital”. 

Article 13 sets out various thresholds that local funds should not exceed in their holdings, 

but also appears to allow for exceptions subject to fund documents and SCA approval. 

This is the same as in the initial proposal. In clause 3, threshold for external assets was 

raised to 20% from 10% earlier – “subject to the provisions contained in clauses (1) and 

(2) herein, the percentage of the fund's investments in external markets may not exceed 

(20%) of the fund's total assets. In case it is desired to increase investments in external 

markets beyond this percentage, an application must be submitted to SCA to obtain its 

prior approval thereof. The fund that obtained such approval of SCA must submit 

monthly reports about the volume and details of its external investments and the financial 

position of the fund”. 

In article 17, clause 1, minimum unit denomination lowered to AED 1 from AED 10 in the 

earlier proposal – “The fund shall, within (15) days from the date of subscription closure, 

issue to the subscribers nominal units of equal nominal value not less than (one Dirham) 

and not more than (AED 500,000) five hundred thousand Dirhams or the equivalent in 

other currencies”. 

100


In article 35, clause 1, dealing with promotion of foreign funds, the text was amended to 

“the fund is established in a foreign country and subject to the oversight of a regulator 

similar to SCA” while previously it read: “To be founded and licensed in a foreign State 

and shall be subject to the supervision of a control authority similar to the State Authority 

or in a free zone in the State”. 

In article 35, the third clause which had appeared in the draft is not present. Clause 3 in 

the earlier version read: “the Fund shall contract with local companies licensed by the 

Authority and the official bodies in the State so as to enable it to fulfil all the tasks 

associated with the Fund and correspond to its articles of association and its prospectus, 

including an authorized promoter and distributor of the Fund by the Authority to conduct 

promotions and underwriting the subscriptions”. This may, however, be dealt with in 

investment management regulations which is expected to be issued soon. 

Articles were added specifying language of fund documents to be in Arabic and while 

English versions may be prepared, the Arabic version would prevail in the event of a 

difference. 

Article 38 specifying which entities are eligible to be promoters of foreign funds was 

expanded beyond banks to include investment companies licensed by the Central Bank 

and companies licensed for this purpose by SCA. 

Article 39, clause 1, dealing with obligations of promoters stated “the local promoter for 

a foreign fund shall exert due diligence when selecting the foreign mutual fund to be 

promoted within the UAE and follow up the performance of such funds after the 

promotion, to safeguard the assets of investors”. 

Article 41 introduced minimum subscription amounts per individual investors for foreign 

funds specifying: 

1. “The minimum subscription per a single investor in the units of foreign mutual fund 

approved by SCA to be promoted in a private offering shall be the limit set out in the 

Offer Document, provided that it may not be less than (AED 500,000) five hundred 

101


thousand Dirhams for a foreign mutual fund and (AED 1,000,000) one million Dirhams 

for a mutual fund established in a free zone outside the UAE. 

2. By way of exception from the provision of clause (1) herein, the minimum subscription 

per a single investor in one or more mutual funds shall be the limit set out in the Offer 

Document in either of the following cases: 

a. The subscriber is engaged through a portfolio management contract with an 

investment manager licensed by SCA, provided that the authority to take and implement 

the investment decisions is held by the portfolio manager and not the subscriber. 

b. The subscriber is involved in a saving and investment plan on periodical basis with 

equal monthly or quarterly payments for a period not less than two years and for a total 

amount per plan of at least (AED 75,000) seventy five thousand Dirhams, or the 

equivalent in foreign currencies. 

3. The minimum subscription per investor in the unit of a foreign mutual fund approved to 

be promoted within the UAE in a public offering shall be the limit set out in the Offer 

Document”. 

SCA intends to publish final investment management regulations, a matrix on conflicts of 

interest, and a list of peer regulated jurisdictions and freezones. 

102


Regulatory Perspective 

Dr. Ryan Lemand – Senior Economic Advisor & 

Acting Head of Risk Management 

Securities & Commodities Authority 

Q/ Please provide a brief overview of SCA 

activities regarding supervision of funds. 

A/ The Securities & Commodities Authority (SCA) is 

the competent body for licensing investment funds in 

accordance with the terms and conditions already 

stipulated in article (5) of the regulation of investment 

funds. The SCA is also responsible for ensuring the 

application of the rules provided in the regulation and for monitoring the activities of 

licensed funds while practicing their role according to the obligations set forth in the 

regulation. 

Q/ In SCA Board decision number 37 of 2012 concerning the regulation of mutual 

funds, what was the reason for excluding applicability to certain investment/fund 

products in article 2 ? 

A/ To clarify what constitute a mutual fund the regulation define such term in Article 1. To 

further minimize potential doubts on what is treated as mutual fund, Article 2 list typical 

money management arrangements that could fall under the letter of the definition, but 

are not mutual funds. 

The regulation of the investment funds comprehensively sets out the necessary 

conditions that should be present in order to classify the fund as an investment fund, as 

follows: 

- Collecting funds from investors 

- Collecting funds for the purpose of investment 

- Issuing fund units to investors on equitable basis by investment value and rights 

Therefore, if a fund lacks any one of these conditions, it is not considered an investment 

fund by SCA. 

103


Q/ Article 4, clause 4 states each company must invest in each local fund it 

establishes at least 3% of the fund’s capital. Is this required to be maintained after 

launch or only applicable at initial launch ? Is this a practice in other jurisdictions 

and, if so, which ones ? 

A/ For closed-ended mutual fund the percentage refers to the position at launch. For 

open-ended fund, the minimum requirement shall be met on an ongoing basis. 

The reason behind such requirement is to have a minimum level of alignment of interest 

of fund sponsors and fund investors. For example, the minimum requirement level 

disincentivise sponsors to profit from placement fees at launch phase without further 

ongoing commitment or interest in the fund’s good performance. 

Q/ In article 22, clause 2, what are examples of mutual funds of special nature ? 

A/ Types of the special nature of some funds have been mentioned in the article (42) of 

the investment fund regulation, amongst these types; the real-estate investment funds 

and the exchange traded funds ETF. 

Q/ Article 24 suggests governance of funds will be similar to corporate entities. 

What are the mechanics and voting mechanisms ? What is the intent of this article 

given unit owners may not interfere in fund management as specified in article 2 ? 

A/ Regarding the mechanics for managing the fund, all the relevant items have been 

mentioned in articles (25 and 26) of the investment funds’ regulation. 

- Voting mechanisms in the fund board of directors: the minimum percentage and 

conditions required in voting decisions will be as per the fund offering prospectus. 

- Regarding the interpretation of article (24/2), which indicates non-interference of the 

fund units owners in the management of the fund, it is again confirmation and assurance 

of the fact that the fund board of directors is the only eligible body assigned for 

management according to specific powers and authorities. The fund units owners 

interference in the fund management is only limited and restricted to the powers 

indicated in the article (24/1). 

Q/ Do the service providers to local funds have to be onshore entities ? 

A/ At the moment there is no specific regulation to answer this question, however SCA is 

currently working on rules to govern fund services providers. 

104


Q/ Foreign entities which want to promote foreign funds will need to appoint a 

local promoter. Can DIFC entities obtain an SCA license ? 

A/ The companies registered and listed by the Dubai International Financial Centre DIFC 

are foreign companies, therefore, they should all abide by the terms already cited in the 

article (38)regarding foreign companies. 

Q/ Regulation also refers to real estate investment trusts. What are the necessary 

elements for growth in REITs in your jurisdiction ? 

A/ The regulation aims to be an umbrella covering the various generalities of mutual 

funds, while providing connecting points for specific regulations (i.e. ETF and REIT) to 

expand it as the industry evolves. 

Q/ Article 41, clause 1 differentiates minimum subscription amounts between 

foreign funds and those established in free zones outside the UAE. Why is that 

given that article 35 requires foreign funds are subject to oversight of a regulator 

akin to SCA ? 

A/ The legislator has intended to distinguish between foreign funds established 

according to SCA’s comparable regulatory bodies license rules in the jurisdiction in 

which they are regulated and licensed and other funds that are not comparably regulated 

by the regulatory bodies where they are established, such as in free zones for instance. 

Q/ What are examples of jurisdictions which are considered as having comparable 

oversight of a regulator similar to SCA ? what are examples of jurisdictions that 

do not ? 

A/ SCA is preparing a list of such jurisdiction and exceptions. In general similarities are 

to be looked in investors’ protection level required: for example a UCITS Luxembourg 

registered fund is considered as originating from a similar regulator to SCA, that would 

not be the case if it was a non-UCITS Luxembourg registered fund. 

Q/ Articles 19 and 39 refer to daily rates being made available in subject offer 

documents. Is daily liquidity the intent ? 

A/ The valuation has to be performed and its result made available as per the offer 

documents independently of the timing of redemption notices. 

105


Q/ In a recent newspaper article, Chief Executive of the DIFC Authority said that 

the SCA's new investment funds regulation have not just made it more difficult for 

financial firms to operate from the DIFC, but throughout the UAE and that the new 

rules had not made the UAE more competitive. How would you respond to that ? 

A/ It is worth mentioning that the terms and conditions laid for promoting the foreign 

funds in the UAE are flexible and resilient enough and complied with international best 

practices. The rules on promotion of investment funds are aimed at protecting investors 

interests a supervising the activities of these funds. Since SCA has started to supervise 

and monitor the promotion of foreign investment funds, over one hundred funds have 

been granted the right to be promoted in the UAE, this proves how SCA regulation has 

actually enhanced and facilitated the opportunities of foreign investment funds. 

SCA spares no efforts to consider and address any difficulty that may arise as a result of 

the application of the investment fund regulation and may even amend it accordingly to 

solve such difficulties whenever required. This is the common approach that SCA adopts 

with all regulations it issued. 

Q/ New regulations covering market making, short selling, securities lending and 

borrowing and liquidity providing have been promulgated. Has there been 

growth/progress in these activities ? 

A/ The Market Maker regime and its complementing regulations have been issued only 

recently which makes it difficult for the time being to assess its impacts on the markets. 

Q/ What trends have you observed in applications for new fund managers / funds 

since release of new regulations ? Do you see any trends in types of funds being 

launched, and if so which types? 

A/ Although the regulation is relatively recent, the SCA has received several applications 

for several type of funds such as money market funds, fixed income funds, real-estate 

funds and equity funds. There has been a notable majority of application by funds 

complying with the principle of Islamic Sharia. 

106


Q/ What areas are you receiving applications for waivers from in the collective 

investment regulations ? 

A/ SCA did not receive formal request for waivers so far and, even if that would have 

been the case, it is highly unlikely that they would have been received favourably as 

there is no scope for waivers in the current regulation which is designed to be flexible 

enough to accept a wide range of applications so long as they respect the spirit of the 

law. 

Q/ Is there an increase in fraud cases that have been identified and specifically 

has there been an increase in frauds pertaining to funds? 

A/ Currently there has been no fraudulent activity detected with regards to the 

investment funds regulations, albeit the regulation is very recent. 

Q/ What specific qualifications / background is SCA looking for in nominations for 

fund directors ? 

A/ In article 25 SCA requires necessary proficiency and expertise from fund directors. As 

those qualities can be obtained in different ways, SCA is allowing the applicant to 

present evidence of such qualities without restricting a priori the pool of potential 

candidates. 

Q/ How do you see the regulatory landscape evolve in the GCC region in the next 5 

years ? Please elaborate. 

A/ The most important target the SCA is looking to achieve is the activation of the GCC 

common market and the unification of the regulations in the GCC financial markets. All 

the efforts are being currently focused on adopting the rules and regulations approved 

by the GCC leaders and any other relevant rules to be approved and adopted in the 

future. 

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Industry Perspective: New Requirements: The 

Opportunity for Excellence? 

Hazem Elmalla - Head of Advent Professional 

Services MENA 

Advent Software 

Regulation – the recent UAE mutual fund regulation and 

the KSA’s CMA regulations of the last few years in 

particular – is having a big impact on the investment 

management industry in the Middle East. This is coupled 

with an added onus on enhancing the client experience: 

investors and institutional clients are more demanding than ever in terms of reporting, 

access to information on their portfolios (including online and mobile channels), and 

suitability of their investments to their objectives. These new regulatory and client 

requirements have driven many managers in the region to upgrade their infrastructure 

and replace in-house systems with scalable, reliable, industry-standard solutions. 

Indeed, the world is still feeling the repercussions of the market meltdown of 2008, and 

initiatives for tighter regulation of investment funds have sprung in all corners of the 

globe, including the Middle East. Their aim is to avoid another crisis on the scale of the 

last one, and they revolve around Know Your Client (KYC), anti-money laundering 

(AML), investor protection, risk management, and transparency in particular. 

UAE Mutual Fund Regulation 

In July 2012, the United Arab Emirates’ Securities and Commodities Authority (SCA) 

issued a new set of regulations for mutual funds with strong provisions around Islamic 

finance, corporate governance, risk management, and, of course, investor protection. 

Some of the key requirements revolve around maintaining certain asset allocations: a 

firm must own between 3 and 49% of each fund it manages, and investments in a single 

security or company are capped to avoid over-exposure on any given asset. A minimum 

of cash holdings is also compulsory and must be continuously monitored, to ensure the 

fund can meet its payment or redemption obligations at all times. 

108


Moreover, the regulations spell out a number of obligations for managers in terms of due 

diligence, both to provide adequate and accurate information to investors and in 

managing the fund itself, and financial reporting must meet IASB standards (or AAOIFI 

ones for a Shariah-compliant fund). In addition, fund managers are required to ensure 

the distribution of fund shares through multiple intermediaries without bias to any single 

one. 

KSA Capital Markets Authority regulation 

The key pieces of regulation discussed in this section are the KSA Market conduct, 

Corporate Governance, Investment Fund regulations and the AML and Counter-Terrorist 

Law. 

In terms of trading, investment managers have an obligation to provide best execution 

for their investors, as well as prompt allocation of the assets to the relevant accounts. 

Investor reporting and transparency are also promoted, through provisions regarding 

shareholders’ access to information, disclosure and transparency in the CMA Corporate 

Governance Law. In addition, the CMA’s Investment Fund Regulation requires managers 

to report at least quarterly to unit-holders, and to value the assets of a fund and calculate 

unit prices on each dealing day. 

Moreover, the rules bolster financial reporting standards with the obligation for firms to 

submit annual and interim financial statements, prepared and audited in accordance with 

standards of the Saudi Organization of Certified Public Accountants (SOCPA). A further 

onus is put on transparency through the requirement for managers to establish a 

separate bank account for each investment fund and to maintain records for all securities 

and other assets of each fund. 

In terms of risk management, the rules state that a fund must not unduly concentrate 

investments in a single security or asset type, to avoid over-exposure, and must not 

undertake undue investment risk, but also that a single unit-holder may not own more 

than 10% of a fund’s total NAV, to avoid conflicts of interest. 

Anti-Money Laundering and Anti-Terrorism provisions are equally onerous. Customer 

due diligence and ongoing scrutiny must be applied to all clients, with specific policies to 

109


identify higher-risk clients, annual or ad hoc reviews of existing records, and particular 

attention given to unusual transactions. This includes checking all clients against the 

UN’s lists of “designated” persons prior to opening a new account and on a daily basis 

for existing clients. Records of the client information, account details and transactions 

must be maintained for at least ten years, and made available on a timely basis to the 

Authority upon request. 

What does this mean for investment managers’ systems? 

To ensure that the composition of their portfolios does not “drift” from regulatory 

minimums and maximums due to buy and sell decisions, purchases and redemptions, or 

changes in market conditions, fund managers need to check them constantly. Many 

firms have therefore reviewed or upgraded their systems to ensure they can monitor their 

positions in real time and run pre-trade compliance checks. Having a platform that also 

integrates investor accounting and servicing functionality with core portfolio accounting 

and reporting capabilities brings further benefits; on a single platform, managers can 

quickly see any investor’s positions in relation to those of others at any given time, and 

make adjustments as needed to stay within prescribed percentages. 

A trade order management system with portfolio modeling and rebalancing tools, and an 

integrated pre and post-trade compliance solution can also be a great help for fund and 

asset managers to comply with the asset allocation requirements, as well as best 

execution and prompt allocation provisions, and the calculation of daily NAVs and unit 

prices, particularly if these tools integrate with the firm’s portfolio management system. 

Many managers have also turned in recent years to research management systems, as 

these make it easy to capture, store, search and find information on any investment 

opportunity a manager is pursuing—third-party research, meeting notes, email 

correspondence, articles from the Internet, earnings reports and more. It enables 

managers to make betterinformed decisions that are thoroughly documented and 

demonstrates to regulators that the manager has a consistent, disciplined due diligence 

process. And of course, managers need to ensure the seamless delivery of third-party 

data into all their systems, including custodial and market data, in a robust and reliable 

manner. Many have realized that having the right IT integration in place can save time 

110


and greatly reduce the risk of error when they collect, analyze, consolidate and distribute 

the data they need to meet valuation and asset allocation requirements. 

Regarding investor and financial reporting demands, many firms across the region are 

also looking to upgrade their platform to a fast and robust reporting system that will 

enable them to share the necessary information with their clients and regulators within 

prescribed deadlines – all this, along with enabled, full audit trails to certify that the 

proper controls and processes are in place. They are also looking for flexible tools with 

which they can customize reports for each client according to their requirements, and for 

tools that make this information available to end investors online or via their mobile 

device. In addition, there is growing interest in investment suitability assessment and 

monitoring tools that can help managers define their clients’ risk appetite, propose an 

adequate portfolio to respect this appetite while meeting clients’ investment objectives, 

and ensure that the portfolio always remains within the spectrum of this mandate. These 

tools are extremely valuable to meet the requirements of ever more demanding clients. 

Finally, one of the key tools that investment managers have started to look at to help with 

their customer due diligence is research management systems. We’ve already outlined 

how these solutions can help firms in their investment process, but the good news is that 

they also enable managers to store, organize, track and access the information they 

need on their clients for KYC and AML, and can be set up to send out alerts when a 

review of a client’s status is due or if further information is required. 

Overall, regulators are pushing for better risk management and increased transparency, 

which means more than just letting investors and regulators know what fund managers 

are doing. It also means giving fund managers a clear picture of what is happening in the 

market and in their portfolios. Clients are demanding the same thing, and this double 

increase in demands is putting a real burden on investment managers. However, the 

savviest ones know that there are technology solutions available that can afford them 

greater transparency, give them greater control and empower them to make betterinformed 

decisions. These can alleviate managers’ compliance burden in helping them 

satisfy regulators and generate investor confidence—which, in the end, is the essential 

foundation to guarantee future business development. 

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About Advent Software 

Advent Software, a global firm, has provided trusted solutions to the world’s leading 

financial professionals since 1983. Firms in more than 50 countries rely on Advent 

technology to run their mission-critical operations. Advent’s quality software, data, 

services and tools enable financial professionals to improve service and communication 

to their clients, allowing them to grow their business while controlling costs. 

Advent Software has been present in the Middle East since 2004 and we have a deep 

understanding of and strong commitment to the region. The company maintains a fullservice 

office in Dubai staffed by close to 20 professionals, including sales, services, 

consulting and product support. Our specific local solutions combined with Advent's 

world-class investment management systems are used by over 30 Middle Eastern clients 

today. 

Hazem Elmalla is Head of Advent Professional Services for the MENA region, 

responsible for all consulting and project management services delivered to Advent 

clients in the area. Mr. Elmalla has been with Advent for over 11 years, six of which in 

MENA, where he held several roles including Senior Solutions Consultant and 

Implementation Consultant. Mr. Elmalla holds a Computer Science Degree from City 

University of New York, U.S.A.. 

112


The Dubai Financial Services Authority (DFSA) Funds Regime of the Dubai 

International Financial Centre 

The DIFC is a purpose-built financial free-zone, located within the Emirate of Dubai, 

United Arab Emirates. The DFSA is the independent regulator of financial and ancillary 

services conducted in or from the DIFC, responsible for managing or distributing 

Collective Investment Funds (Funds). The DFSA’s regulatory mandate covers asset 

management, banking and credit services, securities, collective investment funds, 

custody and trust services, commodities futures trading, Islamic finance, insurance, an 

international equities exchange and an international commodities derivatives exchange. 

Regulatory regime for Funds in the DIFC 

 

 

 

 

The DFSA first introduced its Collective Investment Funds regime (the Funds 

regime) in 2006, which was designed to provide adequate investor protection, 

meeting international standards for regulation. 

In 2010, the DFSA made significant changes to the Funds regime, taking 

account of recommendations made by a panel of industry practitioners 

appointed by the DFSA (Panel) to make the regime more facilitative and 

business friendly, whilst remaining true to the International Organisation of 

Securities Commissions (IOSCO) principles for regulating collective 

investment schemes. 

When the International Monetary Fund first assessed the DFSA in 2007 for its 

compliance with the IOSCO principles as part of its Financial Services 

Assessment Programme, it concluded that: “The DFSA has established a very 

impressive set of laws, regulations and rules and policies and procedures for 

regulation. Its staff are well qualified and work to international best practice 

standards.” 

The DFSA regime focuses on disclosure, corporate governance, valuations 

and service providers. The DFSA takes into account a range of matters when 

licensing and supervising Firms that manage and market Funds in or from the 

DIFC. The DFSA also regulates the key players in the Funds management 

service sector, such as Fund administrators, asset managers, custody 

113


 

providers and trustees, to ensure adequate investor protection by promoting 

high industry standards that meet international best practice. 

Some of the key features of the DFSA’s Funds regime are as follows: 

o A Public Fund regime, which provides greater protection to retail 

investors through requirements such as the independent oversight 

and detailed disclosure in Prospectuses; 

o An Exempt Fund regime, which is a type of Fund that is open only to 

professional investors (investors who meet the Professional Client 

test and make at least a US$ 50,000 minimum subscription). 

Exempt Funds enjoy a fast-track registration process and attract 

lower regulatory requirements than a Public Fund, which is open to 

retail investors; 

o DFSA licensed (i.e. DIFC-based) Fund Managers being able to 

establish and manage Funds in the DIFC, as well as in jurisdictions 

outside the DIFC; 

o Fund Managers coming from reputable jurisdictions being able to 

establish and manage Funds in the DIFC under certain 

circumstances; 

o DFSA licensed firms being allowed to distribute a wide range of 

Foreign Funds in or from the DIFC, particularly where a 

recommendation about the suitability of the investment is made to a 

client; 

o A competitive fee structure being applied to Fund Managers and 

Funds; 

o Fund Managers of Umbrella Funds having the flexibility to use the 

protected cell company (PCC) structure for open-ended Umbrella 

Funds, thereby giving investors in each Sub-Fund of the Umbrella 

legal segregation from liabilities arising in other Sub-Funds and the 

Umbrella; 

o Bespoke Shari’a governance requirements applying to Islamic 

Funds, which promote high Shari’a governance standards with 

flexibility of application; and 

o Bespoke regulatory requirements to accommodate specialist Funds, 

such as Private Equity, Property and Hedge Funds. 

114


How Funds are regulated 

Fund Manager 

To establish and manage a Fund in the DIFC (using any one of the three 

vehicles noted below), you need to be either: 

o 

o 

A DFSA licensed Fund Manager; or 

An External Fund Manager. 

DFSA licensed Fund Manager 

o To obtain a DFSA licence, you need to demonstrate to the DFSA 

o 

o 

o 

o 

that: 

You have adequate systems and controls to manage the type of 

Fund you propose to establish; and 

The individuals performing certain functions within the Firm such as 

its Board Members, senior management and key control functions 

(eg compliance and anti-money laundering) meet the relevant 

suitability and integrity criteria. 

Once you have been granted a licence, the DFSA supervises your 

activities relating to the Funds you manage on an ongoing basis. 

Certain types of Funds you manage attract specific requirements. 

For example, if you are proposing to establish a Fund in a 

jurisdiction outside the DIFC (i.e. an External Fund), the DFSA will 

assess the desirability of the relevant jurisdiction in terms of its 

Financial Action Task Force compliance and whether you have 

adequate systems and controls to address any risks arising from 

having the Fund established in that particular jurisdiction. If you are 

proposing to establish and manage only Exempt Funds, there is a 

fast-track process that involves self certification relating to adequacy 

of systems and controls. However, the DFSA’s ongoing supervision 

will require you to demonstrate how you meet the relevant 

requirements. 

115


 

External Fund Manager 

This is a new concept introduced by the DFSA in July 2010, taking account of 

the globalised nature of the Funds management industry. Under the 

applicable requirements, a Fund Manager coming from a reputable jurisdiction 

may establish and manage a Domestic Fund without having to obtain a DFSA 

licence provided: 

o It is a body corporate; 

o It manages the Domestic Fund from a place of business that is in a 

jurisdiction either included in the DFSA’s Recognised Jurisdictions 

List or assessed by the DFSA as providing an adequate level of 

regulation; 

o It subjects itself to the DIFC laws and courts; and 

o It appoints a DFSA licensed Fund Administrator or Trustee, who will 

be required to undertake certain functions, ie acting as the local 

agent of the External Fund Manager to receive process and deal 

with the DFSA for regulatory processes, and also to undertake 

certain investor relation functions relating to the Fund (such as 

maintaining the unitholder register and making the Fund’s 

Prospectus available to investors in the DIFC). 

Fund Vehicle 

Three types of Fund vehicles can be used to establish a Domestic Fund in the 

DIFC. These are Investment Companies, Investment Trusts and Investment 

Partnerships. 

 

Each has its unique qualities, with the most popular today being the 

Investment Company model which is also used for Hedge Funds and Property 

Funds, while Limited Partnerships are more commonly utilised for a number of 

Private Equity Funds. 

o 

An Investment Company will need to be incorporated in the DIFC 

and the Fund Manager must be a corporate director of the 

116


o 

o 

Investment Company. An Investment Company can also use the 

PCC structure. 

An Investment Trust will need to be established by trust deed 

between a Fund Manager and a Trustee. A Trustee can be DFSA 

licensed Trustee or a Custody Provider, or a person regulated and 

supervised in a reputable jurisdiction for custody or depository 

services. The Trustee is responsible for the safe-keeping of Fund 

property and the maintenance of the unit holder register, and must 

monitor whether the Fund is managed in accordance with the Trust 

Deed and the applicable laws. 

An Investment Partnership is a Limited Partnership registered in the 

DIFC, comprised of a General Partner and Limited Partners. The 

General Partner must be authorised by the DFSA to act as the Fund 

Manager of the Fund. 

Types of Funds 

There are two types of Funds that can be established in the DIFC, and be 

managed by either a DFSA licensed Fund Manager or an External Fund 

Manager: 

Public Funds 

Public Funds are open to retail investors, and can be marketed by way of 

public offer. Because Public Funds are open to retail investors, more 

extensive regulatory requirements apply to such Funds to protect retail 

investors. These requirements meet international standards for retail 

protection, in particular, IOSCO principles for regulating collective investment 

schemes. These include detailed disclosure in the Fund’s Prospectus to 

enable retail investors to make an informed investment decision relating to the 

Fund and independent oversight of the Fund management either by a three 

member oversight committee or by the Trustee or Eligible Custodian of the 

Fund. 

117


Exempt Funds 

Exempt Funds are a category introduced to the DFSA Funds Regime and 

 

replaces the existing Private Funds regime. Exempt Funds are open only to 

Professional Clients who make at least a minimum subscription of USD 

$50,000 each. Such Funds can only have 100 or fewer Unitholders and 

cannot be offered to the public - distribution being only by way of private 

placement. 

Both Public Funds and Exempt Funds must have a Registered Auditor who is 

required to report on the financial accounts of the Fund on an annual basis, 

pursuant to international financial reporting standards. A Fund Manager must 

also provide interim and annual reports to unitholders and the DFSA. The 

annual reports must include a valuation of the Fund assets acceptable to the 

Fund’s registered auditor. 

Specialist Funds 

The DFSA Funds regime also provides for the creation of certain specialist 

Funds. Below are key requirements pertaining to specific specialist fund types. 

Islamic Funds 

 

 

The Fund Manager of an Islamic Fund needs to have a licence that authorises 

it to conduct Islamic Business or an Islamic Window before setting up an 

Islamic Fund. 

The Fund Manager must, in respect of the Islamic Fund: 

o Appoint a Shari’a Supervisory Board (SSB) to the Fund. It may use 

the Firm’s SSB for Shari’a governance purposes of the Islamic 

Fund; 

o Establish and maintain Shari’a compliant systems and controls and 

an Islamic financial business policy and procedures manual for the 

Fund; and 

o Ensure that the Constitution and Prospectus of the Fund are 

approved by the Fund’s or Firm’s SSB. 

118


Hedge Funds 

 

The Fund Manager of a Hedge Fund is responsible for ensuring that risks 

associated with the Fund are adequately managed by: 

o Ensuring that the inherent risks in managing the funds are 

adequately addressed including having segregation of duties 

between the Fund investment function and the Fund valuation and 

custody functions; 

o Observing the requirements that relate to the appointment of prime 

brokers which include that they should meet DFSA’s Eligible 

Custodian criteria and that their identity and remit, particularly in 

relation to use of the fund’s assets as collateral, is limited and 

disclosed as required by DFSA rules; and 

o Observing all the best practice standards and guidance issued by 

the DFSA, in particular, the DFSA Hedge Fund Code of Practice. 

Private Equity Funds 

 

These are generally Exempt Funds and taking account of the practices and 

associated risks, the Fund Manager of an Exempt Fund: 

o If the Fund has made alternative arrangements which include the 

appointment of an Investment Committee of at least three 

independent experts, the Fund Manager is not required to appoint 

an Eligible Custodian in respect of the Fund’s assets, so long as 

these alternative arrangements are adequate. 

o Must make certain disclosure in its Prospectus relating to how the 

Fund’s assets are held. 

Property Funds 

 

All Property Funds (i.e. Funds investing predominantly in real estate or real 

estate-related assets) must be closed-ended Funds. 

119


 

 

All Property Funds must 1. ensure they consist only of either real property, 

property related assets (must be listed) and/or units in another property fund; 

2. do not contain more than 40% cash and/or government and other public 

securities 3. have the property assets independently valued annually 4. 

appoint an investment committee consisting of three independent experts. 

A Property Fund which is a Public Fund may: 1. only use either an Investment 

Company or Investment Trust as the investment vehicle of the Fund; 2. must 

ensure that it is listed and traded on an exchange in the DIFC or in a DFSA 

recognised jurisdiction within 6 months of establishment 3. must ensure the 

Fund constitution and Prospectus deal with the manner of issues and 

redemptions of units and the circumstances of any private placements (if 

applicable) 4. limit borrowing to 80% of Net Asset Value 

Property Funds – Real Estate Investment Trusts (REITs) 

 

 

REITS are a sub-set of Property Funds, which are designed for income 

generation. A REIT must, in addition to being closed-ended: 

o Use only Investment Company or Investment Trust as the Fund 

vehicle; 

o Be a Public Fund that is listed on an exchange in the DIFC or DFSA 

recognised jurisdiction within 6 months of establishment 

o Distribute a minimum of 80% of its audited annual net income to 

unitholders; 

o Not borrow beyond 70% of net asset value; and 

o Invest in ‘property under development’ only up to 30% of the net 

asset value. 

In addition to the above specialist classes of Funds, the DFSA Funds regime 

also has specific provisions dealing with Feeder Funds, Fund of Funds, and 

Umbrella Funds. 

Fund distribution (marketing of Funds) 

 

The marketing of both Domestic and Foreign Funds are based on generally 

accepted principles of disclosure through prospectus requirements. However, 

120


 

the level of prospectus disclosure required for Public Funds, which are open to 

retail investors, is higher than the disclosure requirements for Exempt Funds, 

which are open only to professional investors. 

Foreign Funds can only be marketed in or from the DIFC by firms that are 

appropriately licensed by DFSA including licensed firms holding advisory or 

arranging authorisations. Fund marketing could also be undertaken by a 

Representative Office, but a Representative Office is not permitted to 

advise/arrange. Such Firms can now market units of Foreign Funds if one of 

the following criteria is met: 

o The Foreign Fund is both established and operated in a DFSA 

recognised jurisdiction and the Fund type is a DFSA designated 

Fund type. 

o The Foreign Fund is not established and operated in a DFSA 

jurisdiction, but the Fund investment manager and Fund custodian 

meet DFSA requirements in terms of regulation and status 

o The Firm makes a suitability recommendation of the investment in 

the Units of the Foreign Fund to the particular investor, in light of 

that investor's investment objectives and circumstances; or 

o The Foreign Fund meets DFSA criteria as an Exempt Fund by being 

open to less than 100 unitholders, subject to a minimum subscription 

of US$ 50,000 and sold only by way of private placement. The 

Foreign Funds which cannot be marketed to retail investors in the 

home jurisdiction of that fund are prohibited from being marketed to 

retail investors in or from the DIFC. 

Fee structure 

 

The table below highlights the fees applicable to Fund Managers and Funds. 

Fees in 

USD 

Fund Manager licensing application fee $10,000 

Fund Manager annual licence fee $10,000 

Annual fee per Fund $4,000 

Annual ongoing fee per Fund $4,000 

Public Fund registration fee $1,000 

Umbrella Fund (Umbrella) (licensing and annual) $8,000 

Each Sub-Fund (annual) $1,000 

121

Dubai International Financial Centre / Qatar Financial Centre 

Exchange Traded Funds 

Questions Dubai International Financial Centre 

(DIFC) 

Qatar Financial Centre (QFC) 

Service Providers & Fund Statistics 

Number of international administrators 12 1 

Number of fund managers (operators) 14 5 

Number of firms marketing funds 54 7 

Number of funds being marketed 1,807 (mainly from designated jurisdictions) 21 

Stock Exchange 

Stock exchange Nasdaq Dubai The Qatar Exchange (QE), 20% of which 

is owned by the NYSE 

Number of funds listed None Currently 

Taxation 

Taxes at fund level Currently 0%. Guaranteed for 50 years 0% 

Corporate tax rate Not Applicable 10% 

Stamp duty Not Applicable Not Applicable 

VAT Not Applicable Not Applicable 

Regulation 

Name of regulatory body Dubai Financial Services Authority (DFSA) Qatar Financial Centre Regulatory 

Available fund/legal structures Investment Trust 


Investment Limited Partnership 

Authority (QFCRA) 

A fund can be registered as a 

Collective Investment Company 

(CIC) 

Collective Investment 

Partnership (CIP) 

Collective Investment Trust 

(CIT) 

Another permitted fund entity 

Categories of regulated funds Public Funds - Targeting retail Qualified Investor Funds – to be offered to 

and professional investors permitted investors 

122




(DIFC) 

including market counterparties 

Exempt Funds (formerly Private 

Funds - existing private funds 

have two year transition period). 

Targeting professional investors 

and market counterparties 

Open and closed ended funds 

both available 

Average set-up time Public Fund - up to 3 months including 

approval of fund and authorization of 

the fund manager (this timing can be 

greatly reduced where the fund 

manager is already authorized or 

applies as an External Fund Manager 

coupled with the quality of 

documentation submitted) 

Exempt funds – streamlined process 

for authorisation of the fund manager 

and target an average of 5 days to 

complete the notification process of 

the fund - subject to the quality of the 

application submitted 

Documentation 

Basic documents required to set up 

fund 

Domestic Fund Documents 

Application form (all legal 

structures) 

Constitution of the Fund 


Private placement funds – 

Qualified Investor Funds where the 

number of unit holders does not at any 

time exceed 100 and the fund’s 

constitutional document limits the number 

of registered unit holders to 100 persons 

(or less). Professional Investors (proposal 

to open to retail under consideration) 

Depends on the quality and completeness 

of the application and complexity and type 

of fund. 

Constitutional Document: 

For a CIC—the articles of association of 

the company; 

For a CIP—the partnership agreement of 

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(DIFC) 

(memorandum & articles of 

association for an investment 

company, limited partnership 

agreement for a partnership, trust 

deed for an investment trust) 

Certificate of the Constitution** 

Prospectus of the Fund* 

Certification of the Prospectus** 

Draft engagement letter 

appointing an Auditor of a Fund** 

Draft Delegation agreements 

between Fund Manager and 

Custodian, and if applicable Asset 

Manager and Fund Administrator* 

*Self certification process for Exempt Fund 

**Only applicable to a Public Fund 

External Fund Documents 

Fund Approval Letter from Home 

Jurisdiction regulator (applicable 

to a Public Fund only) 

. 

Domestic Fund Manager Documents 

To obtain a DFSA licence the firm must 

demonstrate to the DFSA that it has 

adequate systems and controls to manage 

the type of fund it proposes to establish and 

the individuals performing certain functions 

within the firm meet the relevant suitability 

and integrity criteria. The approach used 


the partnership; 

For a CIT—the trust instrument of the trust; 

For another permitted fund entity—any 

instrument creating the legal form of the 

entity. 

Fund Prospectus 

124




(DIFC) 

and documents required for a Public Fund 

Manager are the same as DFSA’s standard 

licensing process, however, there is a 

streamlined process in place for an Exempt 

Fund Manager application 

External fund Manager Documents 

A Fund Manager coming from a reputable 

jurisdiction may establish and manage a 

Domestic Fund without having to obtain a 

DFSA licence. It should provide the 

following documents: 

Letter of good standing from the 

home state jurisdiction regulator 

Current regulatory licence in 

home jurisdiction 

Confirmation that under the home 

jurisdiction requirements, firm is 

permitted to provide financial 

services to retail clients 

(applicable to Public Fund 

Manager only) 

Appointed Fund 

Administrator/Trustee Agreement 

Promoter/Capital Requirements 

Information 

Is promoter approval required? Yes 

Is there a regulatory obligation on a Yes, if due to poor advice client can 

fund promoter to make good any complain. 

losses suffered by fund? 


125




(DIFC) 

What are the capital requirements for a The capital requirement for a fund promoter 

fund promoter? 

is the higher of $10k, or the Expense Based 

Capital Minimum (depending on outcome of 

Consultation Paper 83, a category 4 Fund 

Promoter may also have a Professional 

Indemnity Insurance requirement). 

What are the capital requirements for a The capital requirements for a fund 

Management Company? 

management company are currently the 

higher of the $500k Base Capital 

requirement; the Expense Based Capital 

Minimum; or the Capital Requirement for 

Credit / Market Risk. This may change 

depending on outcome of Consultation 

Paper 83, where a category 3c Fund 

Redomiciling 

What are requirements / procedures 

for a fund redomiciling into your 

domicile ? 

Supervision 

Manager may be required to maintain 

sufficient Professional Indemnity Insurance 

and no longer be subject to the calculation 

for the Capital requirement for Credit / 

Market risk. A category 3c Fund Manager 

could also be required to submit an Internal 

Risk Assessment Process report to DFSA 

annually. 

As with new application, the licensing 

process applies. Requirements vary 

depending on whether Fund Manager 

external or domestic cat 3 firm. 


Category 4 firm – US$250,0000 

Operator (Category 3) - US$500,000 

Outline the risk management process The risk management process is based on A Firm and/or fund’s risk management 

126




(DIFC) 

for funds in your jurisdiction the DFSA and CIR Rules. Risk 

management process is not the 

responsibility of any designated individual. 

Collectively the responsibility of the board of 

the management company. 

What is the level of supervision Custodian has to be licensed as category 3 

required over a custodian in your firm. Custodian has a duty of care to the 

jurisdiction? 

unit holders and is liable for any failure to 

meet the requisite standard of care. Refer 

to DFSA Rulebook. 

Fund Exemption 

Can fund be exempt from regulation? Not completely but an exempt fund regime 

exists with a lighter touch regulatory regime. 

Marketing 

Marketing restrictions Refer to the DFSA's CIR Module. There 

are two types of funds that can be 

marketed, namely: Domestic and Foreign 

Funds. Foreign Funds can be marketed in 

or from the DIFC if it meets any one of a 

four tiered criteria including designated 

fund, other Foreign Fund criteria, suitability 

recommendation based offer of units, or 

meets the offer of units that satisfy the 

DFSA Exempt Fund criteria 

Set Up/Establishment Fees 


arrangements will be one of the key criteria 

considered before approving a fund in the 

QFC. Such arrangements need to be 

sufficient according to the size nature and 

scale of the Firm/fund’s business. 

Providing custody requires authorisation 

and the RA’s usual risk-based approach 

(dependant on the size, nature and scale 

of the business) will be taken into account 

in this respect. 

No, however, funds licenced under the 

Private Placement Schemes rulebook are 

subject to reduced regulatory 

requirements. 

Marketing is a regulated activity and must 

be carried out by an authorised Firm. 

Subject to regulatory approval and 

adherence to relevant rule requirements, it 

is possible to market overseas and/or QFC 

registered funds within and from the QFC. 

127




(DIFC) 

Application fee Exempt Fund $0; Public Fund $1,000 (if 

umbrella, plus $1,000 for each sub fund) 

Annual fee Initial period - Exempt Fund $4,000; 

Public fund $4,000 

Subsequent (annual) - Exempt Fund 

$4,000; 

Public Fund $4,000 

Stock exchange application fee Fees are differentiated for funds with 

rebates possible for volume 

Closed ended funds, ETFs, ETCs 

Application fee 

Primary US$ 5,000 

Secondary US$ 2,500 

Initial fee 

Primary US$5K/fund cap US$30K/day 

Secondary As above 

Annual fee 

Primary US$ 5K - US$50K 

Secondary As above 

Annual Listing fees for close ended funds / 


US$10,000 

If the fund is not an umbrella 

fund or is an umbrella fund with 

only 1 sub fund—US$ 2,000; or 

If the fund is an umbrella fund 

with 2 or more sub funds— 

whichever is the lesser of the 

following: 

US$ 1,000 x number of sub funds. 

Same as application fee. 

Application fee for the first year is prorated 

based on the number of whole 

months remaining 

128



Questions Dubai International Financial Centre Qatar Financial Centre (QFC) 

(DIFC) 

ETFs / ETCs are variable and will be 

calculated based on the Total Securities 

Listed (TSL) 

Total Securities Listed (TSL) 

Annual Listing Fee 

Up to US$ 10 mn securities US$ 5K 

100 mn & up to 500 mn securities US$ 10K 

500 mn & up to 1 bn securities US$ 20K 

1,000 million securities US$ 50K 

Listing agents fee None 

Legal fees Varies with fund complexity 

Custodian, Administration Fees Varies – (depends on size and complexity 

of fund) Standard fees apply, not specific for 

custodians 

Other 

Legal system Common Law Common Law 

Jurisdiction statistics The US Dollar denominated Dubai The QFC is neither an offshore centre, nor 

International Financial Centre (DIFC) is an onshore capital market with international standards benchmarked with the best, it currently enjoys a zero tax rate which is guaranteed for 50 years, is designated as a financial free zone, having no local partner requirements and attracts both professional a free zone. Companies licensed by the 

QFC are free to operate in both local and 

other currencies while the QFC tax regime 

provides an attractive environment for 

financial services firms to invest in Qatar 

with all QFC registered companies subject 

to a 10% corporation tax charged on 

129




(DIFC) 

and retail investors. Furthermore, it has 

tailor made laws modeled on English 

common law. The DFSA’s funds regime 

was introduced in 2006 and modified in 

July 2010 and scores well when measured 

against the IOSCO standards 

Currency DIFC institutions cannot deal in the UAE 

Dirham 

Operating Infrastructure Institutions 

can obtain available 

infrastructure from various providers within 

the DIFC district only 

Employment Restrictions Emiratisation does not apply in DIFC. There 

are no restrictions on number and/or 

percentage of expatriate workers for 

companies in the DIFC 


locally sourced profits with no local 

partnership requirements. Furthermore, it 

has tailor made laws modeled on English 

common law 

The QFCRA’s funds regime was 

introduced in 2006 and modified in 

December 2010 

There are no restrictions for QFC 

institutions on dealing in any currency 

Subject to availability, QFC will provide 

clients with office infrastructure in its own 

premises 

Alternatively, subject to approval, clients 

can choose to locate anywhere in Qatar 

Qatarisation does not apply in QFC. There 

are no restrictions on number and/or 

percentage of expatriate workers for 

companies operating in the QFC 

130

Bahrain / Kuwait 


Questions Bahrain Kuwait 

Service Providers & Fund Statistics 

Number of international administrators 5 

Number of fund managers (operators) 60 (number of operators for Bahrain 

domiciled CIUs only) 

Number of firms marketing funds 92 

Number of funds being marketed 2,838 (overseas domiciled and Bahrain 

domiciled CIUs) 


Stock exchange Bahrain Bourse and Bahrain Financial 

Exchange (BFX) 

44 

111 funds registered as per Central 

bank of Kuwait 

Kuwait Stock Exchange 

Number of funds listed 32 ( Bahrain Bourse) Only One as per KSE data 

Taxation 

Taxes at fund level None Withholding tax on corporate bodies that 

receive distributions from the fund; the 

fund manager obliged to withhold 15% 

of the distributed dividends and remit 

that amount to the tax authorities 

Corporate tax rate None 

Stamp duty None 

VAT None 

With the object of strengthening and 

developing economic relations on a regular 

basis, and for the creation of favorable 

conditions to attract foreign investments, the 

Kingdom of Bahrain has signed with a 

number of countries four types of 

agreements which are classified as follows: 

• Agreements on the promotion and 

Not Applicable 

131




protection of investments; 

• Agreements on the avoidance of double 

taxation and the prevention of fiscal evasion 

with respect to taxes on income; 

• Agreements on reciprocal exemption with 

respect to taxes on income arising from the 

business of international air transport; and 

• Agreements on economic, trade, and 

technical co-operation. 

Regulation 

Name of regulatory body Central Bank of Bahrain (CBB) Capital Market Authority (CMA) 

Available fund/legal structures Collective investment 

undertakings (“CIU”) – Open and 

closed ended funds both available 

Legal structure of CIUs: 

1. Common Funds (Law of Contract) 

2. Trust (Trust Law) 

3. Investment Company (Company 

Law) 

As per defined by CMA law , Fund is a 

collective investment scheme 

impose a minimum initial 

Categories of regulated funds Retail funds – are CIUs that may Public investment fund with changeable 

be offered to all types of invertors capital 

and are subject to more restrictive 

investment rules, aimed at Closed ( private ) investment fund with 

protecting the general retail fixed capital could be changed 

investors. 

according to Articles of Association , 

Exempt Funds – are lightly units can’t be refunded till the end of 

regulated CIUs that may be fund life 

offered to accredited investors – 

132




investment of USD100,000 (or 

equivalent). 

Private Investment Undertakings 

(PIUs) – are investment 

undertakings that may only be 

offered to high net worth investors 

– imposing a minimum initial 

investment of USD 3 million (or 

equivalent). PIUs are not subject 

to ongoing supervisory 

requirements. 

Average set-up time Up to 3 months, depending on the nature 

and complexity. 

CMA response to the application takes 

one month from the date of application 

Full capital and units’ issuance should 

be completed within 3 months from CMA 

approval otherwise license is cancelled 

Documentation 


fund 

Information memorandum of the scheme Application forms to be presented from 

management agreement, custodian 

and other key agreements relating to the scheme are required to be approved by the authorised parties allowed to set up 

funds. 

CBB (for Bahrain domiciled CIUs). The 

scheme documents have been specified by the CBB in the CIU application form which is Constitution of the Fund (memorandum 

& articles of association of the fund ) 

part of CBB rulebook, volume 7, as these 

vary from one scheme to another, depending upon the nature and type of each scheme. Issuance prospectus for the fund 

included the basic information that assist 

Normally, scheme documents include the investors in fund assessments 

133




agreement, registrar agreement, placement Any other documents required by CMA 

agency agreement, investment management 

agreement, memorandum and article of 

association of the mutual fund and article of 

association of the mutual fund investment 

company and the administrator agreement. 

For Bahrain domiciled exempt CIUs, the 

applicant should submit Form 1 – CIU 

Application Form, formal cover letter signed 

by an authorised signatory of the applicant, 

draft prospectus/offering memorandum, draft 

administration agreement, draft custodian 

agreement, draft subscription agreement, 

draft articles of memorandum of association, 

draft instrument, board resolution of the 

operator approving the establishment of the 

CIU in Bahrain, certified passport copies and 

CVs of directors of the CIU along with CIU 

directors application forms, CVs of fund 

managers, operator’s annual accounts along 

with a copy of its license and Articles and 

Memorandum of Association and an 

acceptably worded undertaking to CBB (if 

operator is outside Bahrain and intends to 

offer CIU in Bahrain), a no objection from 

the home regulator of the operator for 

carrying out mutual fund activities in Bahrain, 

and the processing fee. 

For Bahrain domiciled retail and expert 

CIUs, the same documents required above. 

134




However, additional documents will also be 

required such as the fund management 

agreement, registrar agreement, placement 

agreement, sharia advisory agreement (if 

applicable), investment advisory agreement 

(if applicable), and the representative 

agreement (if applicable). 

Bahrain domiciled PIUs are only required to 

be registered with CBB. A formal letter 

containing the structure signed by an 

authorized signatory of the applicant must be 

submitted, along with the draft PPM, draft 

Articles and memorandum of Association, 

certified and valid passport copies and CVs 

of directors, and a Board resolution of the 

promoter approving the application to seek 

registration of the PIU. 

Foreign funds 

The schemes established and managed 

outside Bahrain are allowed to be marketed 

in Bahrain. The bank/financial institution in 

Bahrain through which a scheme established 

outside Bahrain is marketed in Bahrain must 

obtain the authorisation or registration of the 

CBB prior to the commencement of 

marketing. Marketing of the scheme in 

Bahrain implies that Bahraini residents can 

also subscribe for units in the scheme. 

Essentially, the information required by the 

135




CBB for the marketing of a foreign scheme 

in Bahrain are: 

• Form 1: CIU Application Form; 

• Cover letter signed by an authorised 

signatory of the applicant; 

• the prospectus and subscription agreement 

• a copy of the representative agreement 

with the CBB licensee that will be acting as 

the distributor within Bahrain; and 

• certificate of incorporation or trust 

certificate 

• a copy of the authorisation certificate of the 

CIU concerned from the regulator in its 

country of domicile 


Information 

Is promoter approval required? Yes Yes 

Is there a regulatory obligation on a fund 

promoter to make good any losses 

suffered by fund? 

Yes. Not only the promoter, but any relevant 

person (promoter, manager, custodian, 

administrator, etc.) shall be liable for losses 

Yes , as the fund prospectus should 

contain information that allow investors 

to assess and evaluate the fund 

136




suffered by the investors and the CIU 

because of its unjustified failure to perform 

its duty and obligations towards the CIU. 

What are the capital requirements for a fund promoter? 

No specific requirements. Promoters must 

be licensed entities in Bahrain or their home 

jurisdictions. Regulatory authorities have 

their own licensing and minimum capital 

criteria, and are usually set to match the 

activities undertaken by such entities 

What are the capital requirements for a No specific requirements. Management Determined by the capital authority 

Management Company? 

companies must be licensed entities in board council 

Bahrain or their home jurisdictions. 

Regulatory authorities have their own 

licensing and minimum capital criteria, and 

are usually set to match the activities 

undertaken by such entities. 

Redomiciling 

What are requirements / procedures for 

a fund redomiciling into your domicile? 

Supervision 

Outline the risk management process 

for funds in your jurisdiction 

Redomiciling an existing CIU requires the 

submission of a fresh application and a 

specific approval for that purpose. The 

supporting documents would be the same as 

the ones specified above. 

Bahrain domiciled retail and expert CIUs 

must operate on the principle of risk 

spreading and must maintain and implement 

investment and risk management policies 

aimed at the prudent control of risks. The 

prospectus must summarize the policies and 

limits which the Bahrain domiciled retail / 

137




expert CIU will apply, including (but not 

limited to): 

(a) The type of assets which the CIU may 

invest in; 

(b) The aggregate limits for each asset 

class; 

(c) Permitted individual exposures under 

each asset class; and 

(d) A description of remedial measures to be 

taken in the event of limit exceptions. 

If the investment and risk management 

policies mentioned above are breached, the 

Bahrain domiciled retail / expert CIU must 

take all necessary steps to remedy the 

situation immediately, taking into account the 

interests of the CIU’s participants. 

Bahrain domiciled exempt CIUs should 

operate on the principle of risk management 

and be diligent in maintaining and 

implementing investment and risk 

management policies aimed at prudent risk 

control. 

Bahrain domiciled PIUs are not required to 

demonstrate to CBB the risk management 

policies they maintain, due to the fact that 

they are only marketed to high net worth 

individuals. However, a PIU must be able to 

demonstrate 

potentially 

that the risk exposure 

represented has been clearly 

138




communicated and understood by its 

investors. 

What is the level of supervision required over a custodian in your jurisdiction? Custodians are required to be domiciled in Bahrain and licensed by the CBB under CBB To be licensed and supervised by CMA 

in compliance with the provisions of 

Rulebook Volume 1 (for conventional CMA law 7/2010 

banks), Volume 2 (for Islamic banks) and 

Volume 4 (for investment business 

licensees). They are also subject to ongoing 

supervision by the CBB. 


Can fund be exempt from regulation? Bahrain domiciled exempt funds regime 

exists with a lighter touch regulatory regime. 

Bahrain domiciled PIUs are only subject to 

registration requirements, but are not subject 

to on-going supervisory requirements. 

Marketing 

Marketing restrictions Advertisements in respect of Bahrain 

domiciled retail and expert CIUs must be: 

(a) Fair and not misleading; 

(b) Clear and self–explanatory (describing 

the nature or type of CIU 

to which the advertisement relates); 

(c) State any assumptions on which claims 

in advertisements are 

based; 

(d) Include risk warnings, including the 

potential for loss, that are prominently 

presented and not obscured or disguised; 

(e) Not describe CIUs as “guaranteed” 

unless there is a legally 

No 

As stated in CMA law 7/2010 no party 

can set up funds outside Kuwait or 

market funds inside Kuwait without CMA 

pre approval 

139




enforceable capital guarantee; and 

(f) Not include any comparisons which may 

be misleading considering the circumstances 

of the CIU. 

Where an advertisement contains any 

forecast or projection, it must make clear the 

basis upon which that forecast or projection 

is made. 

The advertisements must include a 

statement informing the client that more 

detailed information on the CIU is contained 

in the prospectus, a copy of which must be 

made available free of charge. 

For exempt Bahrain domiciled CIUs, 

promotion must be limited to accredited 

investors and no public offering or mass 

marketing is permitted. 

Bahrain domiciled PIUs’ promotion must be 

limited to high net worth individuals, and no 

public offering or mass marketing is 

permitted. 

In all cases, marketing of funds can only 

take place through licensed institutions in the 

Kingdom of Bahrain. 


Application fee BHD100 for Bahrain domiciled CIUs and no 

fees are levied on overseas domiciled CIUs. 

Manager 

scheme 

of collective investment 

license is KD 15K upon 

140




applying and every three years for 

renewal 

Applying for investment fund license is 

KD 5,000 paid once upon establishment 

Annual fee BHD 2,000 for Bahrain domiciled CIUs only. 

Stock exchange application fee The registration fee for both a single scheme 

and an umbrella scheme is BHD 300. The 

annual subscription fee for a single scheme 

is BHD 250. In the case of an umbrella 

scheme an annual subscription fee of BHD 

250 is required to be paid for each scheme 

launched under the umbrella. The above 

fees apply to Bahrain Bourse only. 

Listing agents fee There would be no fees if the firm has to get 

listed on the Bahrain Bourse. 

Legal fees Depends on legal firm. 

Custodian, Administration Fees Depends 

custodian 

on chosen administrator and 

Other 

Legal system Schemes are principally regulated in Bahrain 

under the following laws and regulations: 

• CBB Rulebook Volume 7 which is issued 

under the powers available to the CBB under 

article 38 of the Central Bank of Bahrain and 

Marketing Non Kuwaiti funds inside 

Kuwait applications fees is KD 50,000 

paid upon applying for license and 

annually upon license renewal 

Registration fees in the stock exchange 

is KD 10,000 paid upon registration 

Common law , CMA law ‘s provisions 

141




Financial institutions Law 2006 (‘CBB Law’) 

• Bahrain Commercial Companies Law 2001 

• Listing requirements of the Bahrain Bourse 

• The Financial Trust Law of Bahrain 

Jurisdiction statistics 

Currency There are no restrictions for CBB regulated 

institutions on dealing in any currency 

Operating Infrastructure Subject to availability 

Employment Restrictions There are no employment restrictions on 

financial institutions operating in Bahrain. 

According to the Ministry of Social 

Affairs law regarding Kuwaitisation 

percentage for different sectors 

142

United Arab Emirates / Egypt 


Questions United Arab Emirates Egypt 

Service Providers & Fund 

Statistics 

Number of international 

administrators 

Number of fund managers 

(operators) 

Number of firms marketing funds 

Number of funds being marketed 7 local funds and 206 foreign funds (funds that 

have received SCA approval thus far) 


Stock exchange Emirates Securities Market 

Abu Dhabi Securities Exchange 

Dubai Financial Market 

Dubai Gold & Commodities Exchange 

20 

85 

The Egyptian Exchange (EGX) 

comprises two exchanges, Cairo and 

Alexandria, both governed by the same 

board of directors and sharing the same 

trading, clearing and settlement systems 

Number of funds listed 3 

Taxation 

Taxes at fund level Not Applicable Exempted from Taxes, however there is 

a reference in the new draft tax that 

there might be taxes applied on funds 

that invest in private equity 

Corporate tax rate Not Applicable 20% 

Stamp duty Not Applicable No stamp duty on subscription and 

VAT Not Applicable Not applicable 

Regulation 

redemption. However, there will be 

stamp duty should the fund invest in a 

listed company in EGX 

143




Name of regulatory body Securities & Commodities Authority Egyptian Financial Supervisory Authority 

(EFSA) and Central Bank of Egypt 

(CBE) 

Available fund/legal structures Open –ended Mutual Funds 


Categories of regulated funds Open ended mutual funds 

Public and Private Mutual Funds 

Marketing 

Local and foreign Funds 

Average set-up time Regulatory approval indicated to 

be 3 weeks after submission of 

complete documents 

Documentation 


fund 

Domestic Fund Documents 

Cover letter requesting the licensing 

of the fund 

SCA template detailing the main Fund 

features / characteristics 

2 Original stamped copies of the 

Fund Prospectus stamped by the 

legal advisor for the Fund 

Summary of the prospectus 

Investment Manager Agreement 

Custodian Agreement 

Prospectus 

Investment manager 

contract 

Decision structure and 

resumes of personnel 

Internal Auditor 

Other parties’ contracts 

(custodian, administrator, 

brokerage) 

Last financial report for the 

fund (if applicable) 

144




Administration Agreement 

Registrar Agreement 

Auditor Agreement / Acceptance 

letter 

Legal Advisor Agreement 

Shariah Board Advisor Agreement ( 

for Shariah Compliant Funds) 

Any other agreements depending on 

the nature of the Fund 

Undertaking ( an SCA template for 

either Public or Private distribution 

depending on the Fund type) to be 

signed by the Fund’s Sponsor / Issuer 

Documents pertaining to the Sponsor 

/ Issuer of the fund: 

1. Memorandum & Articles of 

Association Certificate of 

the Constitution 

2. Trade License 

3. Central Bank License ( if 

available) 

4. Organizational structure for 

the Investment Manager 

detailing the steps taken 

during the investment 

process 

5. Financial statements for the 

past 3 years 

Foreign (External) Fund Documents 

145




Cover letter requesting SCA’s ‘ No 

Objection’ to the marketing of the 

foreign fund locally either on public or 

private basis 

SCA template detailing the main Fund 

features / characteristics 

Undertaking ( an SCA template for 

either Public or Private distribution 

depending on the Fund type) to be 

signed by the Fund’s Sponsor / Issuer 

Prospectus of the Fund 

Distribution Agreement signed with 

the Fund Sponsor 

Sponsor / applicant’s Memorandum & 

Articles of Association, Trade License 

and Audited Financial Statements for 

the last two year ( for first time 

applicants only) 


Information 

Is promoter approval required? No 

Is there a regulatory obligation on a fund promoter to make good any 


No Yes, this is covered in the prospectus, in 

general the fund prospectus should 

contain information that allows investors 

to assess and evaluate the fund, and full 

transparency of such data must be 

provided to investors 

What are the capital requirements for 

a fund promoter? 

The capital of the company or the foreign EGP 5 million 

branch must be at least ten (10) million 

Dirhams. Banks, financial investment 

146




companies, branches of foreign banks and any 

entity licensed by the Central Bank shall be 

exempted from the capital condition provided 

that such entities submit an unconditional bank 

guaranty in favor of SCA in the amount of ten 

(10) million Dirhams issued by a bank operating 

in the State. SCA may cash such guaranty or 

any part thereof at any time to cover any 

What are the capital requirements for 

a Management Company? 

Redomiciling 



domicile ? 

Supervision 

Outline the risk management process 

for funds in your jurisdiction 

What is the level of supervision 

required over a custodian in your 

jurisdiction? 

financial liabilities that SCA may decide to 

perform towards any investors 

As with new application for foreign funds, the 

licensing process applies 

Custodian has to be licensed by SCA before it 

can offer custodian services to local funds. 

There are currently 5 licensed Custodians in the 

UAE. 

EGP 5 million 

The fund will be treated as a new fund 

and new subscriptions will need to be 

offered to subscribers 

The Central Bank shall carry out oversight and 

prudential supervision tasks pertinent to the 

financial position of the mutual funds 

established and licensed in accordance with the 

provisions of these Regulations. The Central 

Bank shall prepare inspection reports and send 

147




copies thereof to SCA to take the necessary 

action. SCA shall be consulted with the Central 

Bank in respect of the penalty if any violation is 

evident 

The key functions of the fund's safe custodian 

shall be as follows: 

1. To keep in safe custody the securities in 

which the fund invests its assets. 

2. To keep title deeds for the assets in which 

the fund invests its monies. 

3. To keep all documents, papers, contracts and 

licenses pertinent to the assets of the real 

estate investment trust. 

4. To follow up the daily movement of purchase 

and sale transactions processed by the 

investment manager or whoever is assigned 

this task as per the nature of the fund; and take 

the necessary steps to transfer balances from 

and to the fund according to the nature of the 

transaction. 


Can fund be exempt from regulation? No No 

Marketing 

Marketing restrictions Marketing restrictions are listed in the SCA 

Undertaking Template for Local and foreign 

148




funds and depending on whether for public or 

private distribution. Generally, funds that are 

licensed for public distribution may advertise in 

public media however marketing material and 

marketing channels may require SCA’s 

approval beforehand. Funds that are licensed 

for private distribution may not advertise in any 

mass media. 


Application fee None currently. However, SCA shall issue 

a decision to determine fees to be 

collected when licensing a fund and the 

fees for obtaining approval of the 

promotion of foreign mutual fund units 

within the UAE and any other fees 

payable for services pertinent to the 

implementation of these regulations 

Annual fee As above 

Stock exchange application fee 

Listing agents fee 

Legal fees 

Custodian, Administration Fees Varies – (depends on size and complexity of 

fund and the appointed service provider) 

SCA may impose minimum and maximum limits 

for any consideration for management, 

supervision or services, commission or fees 

received by any of the parties associated with 

149




the fund. 

Other 

Legal system Egyptian Laws 


Currency In addition to the UAE Dirham, funds can be 

denominated in other major currencies 

Operating Infrastructure Not applicable 

Employment Restrictions None 

150

Oman / Saudi Arabia 


Questions Oman Saudi Arabia 

Service Providers & Fund 

Statistics 

Number of international 

2 

administrators 

Number of fund managers 

6 

(operators) 

Number of firms marketing funds 

Number of funds being marketed 


Stock exchange Muscat Securities Market Saudi Stock Exchange (Tadawul) 

Number of funds listed 10 mutual funds listed on the MSM 247 including 3 ETFs 

Taxation 

Taxes at fund level 0% Technically treated as a corporate and subject 

to Zakat and/or corporate tax, depending on 

the type of shareholders. 

However, in practice, funds do not submit 

Zakat /tax return and do not pay Zakat/tax. 

The tax authority has not challenged the 

practice. 

Corporate tax rate 12% per annum The tax liability depends on the nationality of 

Stamp duty Not Applicable Not Applicable 

the shareholders of the company. To the 

extent that the shares are owned by non-GCC 

nationals, a corporate tax of 20% applies on 

the tax adjusted profits. In addition, a 2.5 % 

Zakat (a religion wealth tax) is charged on the 

interest of GCC nationals in the corporation. 

The Zakat applies on the value of the 

company, subject to some adjustments 

151




VAT Not Applicable Not Applicable 

Regulation 

Name of regulatory body Capital Market Authority Capital Market Authority 

Available fund/legal structures 

Categories of regulated funds Based on the regulations published on CMA’s 

website in part 8, the categories of regulated 

funds are: 

Funds Investing in Foreign Funds 

Specialised Investment Funds 

Funds of Funds 


Funds are also divided into two categories: 

Private offerings 

Public offerings 

Average set-up time CMA shall consider the application and 

issue its decision within fifteen (15) days 

from the date of receipt of the dully 

completed application. 

The sponsor shall complete the process of 

establishing the fund within three (3) 

months from the date of notice of approval 

by CMA as otherwise such approval would 

be considered void. 

Documentation 


fund 

• Application 

• Draft article of association 

Contract between the fund manager 

and the unit holders 

152




• Draft prospectus Terms and conditions 

Subscription/redemption forms 

Any contracts entered into by the 

fund manager 

Audit report (if any) and, if more 

recent, the latest unaudited report 


Information 

Is promoter approval required? Yes Yes 

Is there a regulatory obligation on a 

fund promoter to make good any 


Capital Markets Law & Executive 

Regulations (Chapter 10, Articles 277 & 

278): 

Article (277): The management of the fund 

shall recommend to the extraordinary 

general meeting to dissolve and liquidate 

the fund for any reason including: 

1. Expiration of its term. 

2. Accomplishment of the objective 

for which the fund was established 

pursuant to the articles of association and 

the prospectus. 

3. Reduction of the net asset value 

(NAV) of the fund to less than RO 500,000 

4. The fund stops carrying out its 

business without legitimate reason. 

5. Reduction in the net asset value 

(NAV) to the extent that expenses incurred 

by the investors are unreasonably high. 

6. On recommendation by the 

153




investment manager. 

7. On request by CMA. 

The general meeting shall issue the 

resolution to dissolve and liquidate the 

fund including appointment of liquidator, 

setting its fees and the liquidation process. 

The powers of the fund’s management and 

service providers shall end immediately on 

appointment of the liquidator. 

Article (278): The proceeds of the 

liquidation shall be used to discharge the 

due and payable obligations of the fund, 

after payment of dissolution and liquidation 

expenses. The balance shall be distributed 

to investors on pro rata basis according to 

their holdings. 

What are the capital requirements 

for a fund promoter? 

What are the capital requirements 

for a Management Company? 

Redomiciling 



domicile ? 

Fully paid-up capital of fund at the time of 

establishing shall not be less than OMR 2 

million. The share of the sponsor shall not 

be less than 5% of this capital 

Capital Markets Law & Executive 

Regulations (Chapter 2, Articles 213-221): 

Article (213): Any person desirous of 

establishing a fund shall appoint a 

company licensed by CMA to be the 

investment manager for funds, to 

coordinate with CMA in respect to all 

matters pertaining to the process of 

SAR 50 million 

SAR 50 million 

154




establishment of the fund, issuing and 

listing its units. 

Article (214): The sponsor shall apply to 

CMA to obtain approval to establish the 

fund and shall attach with the application, 

the draft articles of association, draft 

prospectus in accordance with the format 

prescribed by CMA as well as any 

statements or documents that CMA may 

require. 

Article (215): CMA shall consider the 

application and issue its decision within 

fifteen (15) days from the date of receipt of 

the duly completed application. Where 

such period passes without a decision in 

the application, the application shall be 

deemed to have been rejected. 

Article (216): The sponsor manager shall 

complete the process of establishing the 

fund within three (3) months from the date 

of notice of the approval by CMA as 

otherwise such approval would be 

considered void. 

Article (217): Issuance of investment units 

as regards issue, subscription and 

allocation processes shall be subject to the 

provisions of Part I of this regulation in 

accordance with the provisions of this Part. 

155




Article (218): CMA shall prepare a register 

for funds in which the fund which fulfills the 

terms and conditions of establishment, 

after the end of subscription period, shall 

be registered. 

Article (319): The articles of association of 

the fund shall contain the following 

information at minimum: 

1. The form of the fund (closedend 

or open-end). 

2. Name 

3. Capital 

4. Currency 

5. Constitution of the management 

for the Fund. 

6. Investment objectives of the 

fund 

7. Method of transfer, issue and 

redemption of its units 

8. Frequency of redemption (if any) 

Supervision 

Outline the risk management 

process for funds in your jurisdiction 

What is the level of supervision 

required over a custodian in your 

jurisdiction? 

Risk management process is not the 

responsibility of any designated individual. 

Collectively the responsibility of the board 

of the management company. 

Custodian has a duty of care to the unit 

holders and is liable for any failure to meet 

the requisite standard of care. 

156





Can fund be exempt from 

regulation? 

Marketing 

No 

Marketing restrictions There are two types of funds that can be 

marketed, namely: Domestic and Foreign 

Funds. Foreign Funds can be marketed 

only with prior approval of CMA. 

An investment fund established in a 

jurisdiction other than the Kingdom may not 

be offered within the Kingdom without the 

consent of the Authority 

An advertisement may not include: 

A projection or prediction of the total 

return or other performance of the 

investment fund or of unitholders of 

an investment fund (except that an 

advertisement for an investment 

fund with a guarantee or other 

principal protection feature may 

disclose any guaranteed minimum 

return); or 

Any form of testimonial, that is, 

statements about the experience of 

actual or fictitious unitholders of that 

fund or other funds with the same 

manager. 


Application fee OMR 500 

Portfolio management OMR 5,000 

Investment management OMR 5,000 

Issuing management 10,000 

157




Marketing of non-Omani securities OMR 

10,000 

Annual fee 0.5% of the nominal value of the listed 

securities subject to a maximum of OMR 

25,000 and minimum of OMR 2,000-once 

on filling the initial draft prospectus – 

Stock exchange application fee 

Listing agents fee 

Legal fees 

Custodian, Administration Fees 

Other 

Legal system Capital Market Law 


Currency Omani Rial 

Operating Infrastructure Institutions can obtain available 

infrastructure from various service 

providers within the CMA 

Employment Restrictions Priority is given to Omanis 

158

Benchmarks

Benchmarks 

GCC Overview 

Money market benchmarks still have most money tracking them 

In June 2012, top 10 benchmarks were tracked by 70% of fund assets in the GCC 

in the dataset. This concentration remains, in part, due to the relatively large size of 

money market funds – which are particularly large in Saudi Arabia - in aggregate GCC 

data. 

Top Benchmarks Used by Funds in the GCC 


Rank Benchmark Fund Assets 

1 SAIBOR 12,889 

2 KSE Index 1,924 

3 S&P Saudi Arabia Shariah Index 1,821 

4 LIBOR 1,815 

5 SAR Murabaha Index 1,033 

6 KIC Index 854 

7 S&P Shariah Index 731 

8 KIBOR 671 

9 S&P Saudi Arabia Large Cap Index 624 

10 MSCI World Index 593 


Limited change in the position of global index providers 

The ranking of top benchmarks is largely the same as in 2011. Earlier, the 

discontinuation of the MSCI GCC index as a result of a lack of agreement between the 

Saudi Stock Exchange (Tadawul) and MSCI had led most fund managers to adopt the 

S&P GCC index. There were US$ 6.68 billion in GCC fund assets tracking S&P indices 1 , 

US$ 1.7 billion tracking MSCI indices, US$ 465 million tracking FTSE indices, and US$ 

407 million tracking Dow Jones indices as of June 2012 according to the available 

1 

S&P and Dow Jones became S&P Dow Jones Indices on July 2, 2012 following a joint 

venture agreement between McGraw-Hill Financial and CME Group. 

161

Benchmarks 

dataset. The dataset includes indices covering markets inside and outside the GCC 

region. In 2012, about 27% of fund assets from the available sample data tracked indices 

produced by these index providers. This figure rises to about 50% after taking out major 

money market benchmarks reflecting the presence of international index providers in the 

equity space. Indices created by regional firms and stock exchanges are also relatively 

widely tracked. 

By fund type, the most widely tracked benchmark in the GCC by money market funds is 

the Saudi interbank rate (SAIBOR). The most widely tracked benchmark by equity funds 

in the GCC is the Kuwait Stock Exchange Index. 

Benchmarks Used by Equity and Money Market Funds in the GCC (by fund assets) 


Top Equity Benchmarks 

Top Money Market Benchmarks 

KSE 

14.00% 

S&P S.A. 

Shariah 

13.15% 

KIBOR 

2.07% 

Other 

8.91% 

Other 

52.77% 

TASI 

4.00% 

KIC 

6.15% 

S&P 

Shariah 

5.36% 

S&P S.A. 

LargeCap 

4.57% 

LIBOR 

5.17% 

SAIBOR 

83.85% 


162

Benchmarks 

Use of hybrid benchmarks in some equity funds 

In the UAE, a breakdown of locally sponsored fund assets by indices being tracked 

reflects the choice of benchmarks by individual funds. In Saudi Arabia, S&P Saudi Arabia 

Shariah Index and its variants are the top benchmarks for equity funds. S&P Saudi 

Arabia Shariah index is the top benchmark for sharia compliant equity funds in the GCC, 

but this is due to the large weight of Saudi Arabian fund industry. 

Benchmarks Used by Equity Funds in the UAE and Saudi Arabia (by fund assets) 


UAE 

Saudi Arabia 

Other 

51.5% 

90%MSCI 

Arabian + 

10% LIBOR 

11.0% 

S&P Pan 

Arab L/M 

Cap 

8.9% 

NBAD S&P 

UAE GCC 

Combined 

10.4% 

MSCI UAE 

9.2% 

MSCI World 

9.0% 

Other 

36.8% 

FTSE 

Europe 

5.9% 

MSCI 

World 

6.1% 

S&P S.A. 

Shariah 

25.4% 

S&P S.A. 

6.6% 

S&P 

Shariah 

10.4% 

S&P S.A. 

LargeCap 

8.8% 


In Kuwait, the Kuwait Stock Exchange index is the top benchmark for equity funds, 

followed by Kuwait Investment Company index. In Qatar, the Qatar Stock Exchange 

index is the top benchmark. In Oman, the Muscat Securities Market index is the top 

benchmark. In Bahrain, the S&P GCC index is the top benchmark reflecting the fact that 

most funds there had a broader target investment universe than just the listed 

companies there. 

163

Benchmarks 

Selected Benchmarks Used by Equity Funds in Kuwait & Bahrain 

(June 2011) 

Top Kuwait Equity Benchmarks 

Top Bahrain Equity Benchmarks 

S&P GCC 

Large Cap 

2.9% 

Al Wataniya 

Islamic 

3.4% 

Global 

Islamic 

3.8% 

S&P GCC 

4.5% 

Other 

16.3% 

KIC 

21.1% 

KSE 

48.0% 

S&P Pan 

Arab 

6.4% 

KSE&GCC 

Investable 

6.5% 

S&P Pan 

Arab Large 

Cap 

7.5% 

Other 

24.7% S&P GCC 

27.6% 

S&P GCC 

Shariah 

9.0% 

S&P GCC 

Large Cap 

18.2% 


Selected Benchmarks Used by Sharia Compliant Equity Funds in the GCC 

(millions of U.S. dollars where relevant, June 2012) 

Rank Benchmark Fund Assets 

1 S&P Saudi Arabia Shariah Index 1,795 

2 S&P Shariah Index 735 

3 S&P GCC Composite Shariah Index 278 

4 S&P BMI Shariah Index 259 

5 Al Bilad Pure Islamic Saudi Index by S&P 189 

6 S&P Saudi Arabia Index 157 

7 Global Islamic Index 151 

8 KSE Index 144 

9 Dow Jones Islamic Market Index 137 

10 Al Wataniya Islamic Index 136 


164

Benchmarks 

Recent Developments 

Regional 

 

 

In January 2013, Vanguard – one of the largest mutual fund providers in the 

US - announced that Vanguard Emerging Markets Stock Index Fund, including 

Vanguard MSCI Emerging Markets ETF, began tracking the FTSE Emerging 

Transition Index in 2013 as an interim step toward ultimately tracking the 

FTSE Emerging Index. The plan to change indices had been announced in 

October 2012 and was expected to result in considerable savings over time in 

the form of lower expense ratios according to the company. Egypt, Morocco, 

and UAE are MENA constituents of the FTSE Secondary Emerging Countries. 

In December 2012, S&P Hawkamah ESG Pan Arab Index underwent its 

annual rebalancing. The index includes the top 50 Pan Arab companies based 

on their performance on nearly 200ESG metrics and uses an innovative ESG 

score weighting scheme to ensure stocks with higher ESG scores have a 

greater influence on the index than those with lower ESG scores. 

In November 2012, S&P Dow Jones indices announced the results of 2012 

annual country classification consultation review. For Kuwait, Oman, Qatar 

and UAE, based on the responses received and as well as additional client 

feedback, S&P Dow Jones decided that there will be no change in country 

classification for these four countries. 

 

 

In July 2012, MSCI introduced the new MSCI Islamic Market Investable Market 

Indices. MSCI Is expanding its global Islamic indices with new IMI (Investable 

Market Indices) each of which includes the full spectrum or large, mid and 

small cap constituents. The new indices are calculated based on the MSCI 

Islamic Index Series Methodology, which has been granted a Fatwa by an 

independent sharia board. 

In June 2012, Standard and Poor’s Indices announced the launch of shariah 

index in partnership with OIC (Organization of Islamic Countries) S&P/OIC 

COMCEC 50; an index designed to measure the performance of 50 leading 

shariah-compliant companies from the states of OIC. Companies from all 19 

countries whose stock exchanges are members of OIC are eligible for the 

165

Benchmarks 

index which includes companies from Bahrain, Bangladesh, Cote d’Ivorie, 

Egypt, Indonesia, Jordan, Kazakhstan, Kuwait, Lebanon, Malaysia, 

Morocco, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Tunisia, Turkey 

and UAE. 

 

 

 

 

In April 2012, MSCI introduced the MSCI Frontier Markets 100 Index. The 

Index is highly correlated to the broader MSCI Frontier Markets Index, but is 

composed of 100 of its largest and most liquid constituents. The new index 

provides coverage of frontier markets while placing emphasis on tradability. 

In March 2012, MSCI, S&P Indices and FTSE announced the creation of the 

first ever trade association for the trade industry. The Index Industry 

Association (IIA) will form an official, representative body for the global index 

industry, with a remit that includes educating investors on the attributes and 

role of indices within the investment process and advocating the interests of 

index users and providers worldwide. 

In February 2012, S&P Indices extended the range of its High Beta family with 

the launch of S&P BMI Emerging Markets High Beta Index. The index 

measure performance of 200 stocks in 21 markets including MENA countries 

Egypt, Morocco that are most sensitive to changes in market returns. They 

are designed to serve as benchmarks for investors who wish to take 

advantage of market volatility. Constituents are weighted relative to their level 

of market sensitivity with most sensitive stocks receiving highest weights. 

In August 2011, Standard and Poor’s announced that it has expanded S&P 

Shariah Index series with the introduction of S&P Pan Africa Shariah Index. 

The index is designed to serve as benchmark for shariah compliant 

investments in African continent. The S&P Pan Africa Shariah Index is 

comprised of shariah compliant equities from 12 countries (Botswana, Ghana, 

Cote D’Ivorie, Egypt, Kenya, Mauritius, Nigeria, Zambia, Egypt, Morocco, 

Tunisia and South Africa). 

In December 2011, Standard and Poor’s Indices launched the S&P AFE 40, 

an index designed to measure the performance of 40 leading companies from 

the Pan-Arab region. S&P Indices partnered with the Arab Federation of 

Exchanges (AFE) to create the Index which includes companies from Bahrain, 

Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Palestine, Qatar, Saudi 

166

Benchmarks 

Arabia, Tunisia and the United Arab Emirates. The S&P AFE 40 is 

comprised of the 40 largest stocks (measured by float-adjusted market 

capitalisation) listed on AFE member exchanges subject to the following 

restrictions: each stock must have at least US$ 50 million in value traded over 

12 months, there can be no more than 10 stocks per country, based on 

domicile, and at least one stock from each country must be included. In terms 

of weighting, the S&P AFE 40 uses a capped market capitalisation weighted 

index scheme, where the maximum weight of any constituent cannot exceed 

10% and the maximum weight for each country, based on domicile cannot 

exceed 35%. 

Kuwait 

On Dec 2012, Kuwait Stock Exchange performed a new review for “Kuwait 15 

Index” in the end of November 2012. The review showed that Ahli United 

Bank, Boubyan Perochemical Company, Qurain Chemical Industries Company 

exited from the index, while Wataniya Telecom Company, Al Ahli Bank of 

Kuwait and Kuwait Food Company entered instead. 

Morocco 

 

In June 2012, MSCI announced MSCI would be adding the MSCI Morocco 

Index to the list of country indices for potential reclassification to Frontier 

Markets as part of the 2013 annual market classification review. MSCI cited a 

significant decrease in liquidity since 2008 and consequent decline in the 

number of constituents in the MSCI Morocco Index to three. 

Oman 

 

On November 29, 2011, Bank Muscat launched the BM S&P GCC Large Cap 

Index Fund (BankMuscat Standard & Poor's Large Cap Index Fund), an index 

tracking fund directed at institutional investors aiming to tap into the attractive 

growth potential of the GCC region markets. 

167

Benchmarks 

Qatar and United Arab Emirates 

 

In June 2012, MSCI announced that the MSCI Qatar Index would remain 

under review for a potential reclassification to Emerging Markets as part of the 

2013 annual market classification review. MSCI cited very low foreign 

ownership limit levels as the only remaining impediment to the inclusion of the 

MSCI Qatar Index to Emerging Markets. MSCI also announced that MSCI 

UAE Index would remain under review for a potential reclassification to 

Emerging Markets as part of the 2013 annual market classification review. 

MSCI cited a delay in the implementation of a proper false trade mechanism. 

A review of MSCI announcements from previous years indicates that the 

points raised as remaining impediments to inclusion of UAE in the Emerging 

Markets Index has changed over time. Consistency in terms of the application 

of criteria to constituent countries in the Emerging Markets Index has also 

come under scrutiny (MSCI announced intent to reclassify Morocco in June 

2012). 

 

In August 2011, Russell Investments announced that the UAE had become the 

first and only GCC country to obtain the emerging market status within the 

Russell Global Index series. Russell announced that although the UAE was 

currently the only GCC economy to be included in its Emerging Markets 

indices, Qatar met most of the rules-based criteria for the same classification. 

It noted that the principle factor in why Qatar remains a Frontier economy was 

that regulations in the country stipulate a 25 per cent foreign ownership limit on 

Qatari companies -- which limits investment opportunities and the likelihood of 

allocations to Qatari stocks within emerging markets portfolios. 

 

In June 2011, MSCI extended the review period by 6 months for the potential 

reclassification of the MSCI Qatar and UAE indices from frontier market to 

emerging market status to give more time to market participants to assess the 

impact of the enhancements implemented earlier in the year on the two 

markets. 

168

Benchmarks 

 

In May 2010, FTSE announced UAE would be upgraded to secondary 

emerging status within its global equity index series effective from September 

2010. 

Saudi Arabia 

 

 

 

In December 2012, MSCI noted that the introduction of a new scheme allowing 

direct access for non GCC based investors to the Saudi equity market could 

result in MSCI considering the inclusion of Saudi Arabia in Frontier Markets or 

Emerging Markets, depending on the level of market accessibility. 

In April 2012, MSCI announced it would reintroduce coverage of the Saudi 

Arabian equity market with the release of standalone country indices in June 

2012 after reaching agreement with the Saudi Stock exchange for the 

provision of market data. MSCI also announced it would reintroduce MSCI 

GCC Countries Index and the MSCI Arabian Markets Index at the same time. 

In May 2011, the president of the Saudi Capital Market Authority (CMA) stated 

that Saudi Arabia's stock exchange was in talks with several index providers, 

including MSCI, for inclusion in their indices. No specific time-frame or details 

on the talks were offered in the statement. 

 

In July 2010, MSCI announced that it would discontinue the calculation of all 

MSCI Indices containing securities listed on Tadawul, the Saudi Stock 

Exchange from September 29, 2010. MSCI announced that despite good faith 

efforts by both parties, MSCI and Tadawul had been unable to agree on the 

terms under which the Tadawul would continue to make data available to 

MSCI for the creation of indices. As a result, Tadawul data would no longer be 

available to MSCI. 

169

Benchmarks 

Performance Rankings 

A number of different approaches were considered for this section including presentation 

of just relative performance, using custom benchmarks, focusing on asset type, 

geographic focus, and risk indicators. Ultimately, a straightforward approach was used. 

The tables that follow are simple and essentially based on holdings 2 . The tables do not 

take into account risk, leverage, or size. First, information on benchmarks tracked by 

funds 3 was compiled. Benchmarks could not be identified for all funds in the dataset. 

Benchmarks tracked by the most number of funds were selected. The funds were filtered 

to ensure appropriate comparison based on specific classification on a number of 

criteria. The remaining funds were then ranked on the basis of 2012 and cumulative 

2009-2012 returns 4 . The disadvantage of this approach is that selection of funds on the 

basis of a strict comparison of only those that follow particular benchmarks results in a 

limited ranking dataset. This approach is relaxed in two tables which also present a list of 

equity funds that track two commonly used benchmarks and their variants. The approach 

is further relaxed in the last two tables which present the performance of various 

bond/sukuk funds with regional exposure. 

Selected Indices and Interbank Rates 

Benchmark 2009 2010 2011 2012 

Performance 

2012 2009-12 

Tadawul All Share Index (TASI) 6,122 6,621 6,418 6,801 5.98% 11.1% 

S&P Saudi Arabia Shariah Index 809 883 868 936 7.82% 15.7% 

S&P GCC Composite Index 59.8 68.6 65.4 69.9 6.91% 16.9% 

S&P GCC Composite Shariah Index 676 754 698 736 5.41% 8.76% 

S&P Pan Arab Composite Index 658 732 639 662 3.64% 0.71% 

3M SAIBOR (%) 0.768 0.751 0.78 0.995 - - 

3M US$ LIBOR (%) 0.251 0.303 0.581 0.306 - - 


2 

Comparison of funds benchmarking against the same index ensures like for like 

comparison in terms of investment allocation for equity funds, but not necessarily for 

money market funds. The latter’s performance is influenced by country specific effects. 

3 Only the top performing class was included for funds with different share classes as 

the tables were intended to be solely indicative. Bond/sukuk tables include different 

share classes. 

4 

The three year rankings did not take into account the fact that some funds changed 

benchmarks during the period. 

170

Benchmarks 

Equity Funds 

Performance of Conventional Funds Tracking TASI 

(% change) 

Rank Fund Name Fund Sponsor Performance 

2012 2012 Rank 2009-12 

1 HSBC Saudi Equity Trading HSBC Saudi Arabia 14.68 1 32.26 

2 EFG Hermes S.Arabia Equity EFG Hermes KSA 12.88 2 28.47 

3 HSBC Saudi Equity Fund HSBC Saudi Arabia 11.05 7 21.49 

4 Riyad Equity Fund 1 Riyad Capital 8.9 5 23.01 

5 Morgan Stanley Saudi Equity Morgan Stanley S.A. 8.32 3 27.13 

6 BLOM Saudi Arabia Fund Blominvest S. Arabia 7.46 

7 SAIB Saudi Equity Fund 

SAIB BNP Paribas 

A.M. 

7.31 8 14.2 

8 Global Saudi Equity 

Global Investment 

House 

6.98 4 25.49 

9 Rana Saudi Equity Rana Investment Co 4.06 9 3.21 

10 Al Arabi Saudi Equity Fund ANB Invest 3.31 6 21.95 

11 SICO Kingdom Equity Fund Securities &Invest Co 2.65 - - 

12 Saudi Equity Fund 

Saudi Hollandi 

Capital 

1.25 10 2.16 


Performance of Shariah Compliant Funds Tracking the S&P GCC Composite 

Shariah Index (% change) 



1 Jadwa GCC Equity Fund Jadwa Investment 19.22 1 43.86 

2 Noor Local & GCC Equity Noor Financial Invest. 11.05 - - 

3 Al Yusr GCC Equity Fund 

Saudi Hollandi Capital 

Company 

9.66 5 19.8 

4 AlAhli GCC Trading Equity NCB Capital 9.64 4 20.95 

5 Al Rajhi GCC Equity Fund Al Rajhi Capital 9.09 3 21.39 

6 Al Raed GCC Fund 


Investment Management 

7.52 2 21.73 

7 

Al Basha'er GCC Equity Kuwait Finance and 

Fund 


5.43 8 -3.13 

8 Al Islami GCC Equity Fund Securities &Invest Co 4.84 6 8.91 

9 Al-Khabeer GCC Equity Al Khabeer Capital 3.17 - - 

10 Noor GCC Islamic Fund Noor Financial Invest. 3.06 7 6.59 


171

Benchmarks 

Performance of Conventional Funds Tracking the S&P GCC Composite Index 

(% change) 



1 Vision Emerging GCC 

Vision Investment 

Services Company 

11.53 3 21.27 

2 United GCC Fund United Securities LLC 10.4 - - 

3 Al Musahem GCC Fund 



8.97 2 23.82 

4 SAIB GCC Equity Fund 


Asset Management 

8.62 1 24.71 

5 GIC Gulf Premier Gulf Investment Co. 5.92 5 18.54 

6 SICO Khaleej Equity Fund Securities & Invest Co. 5.91 6 13.68 

7 GCC Equity Fund Saudi Hollandi Capital 4.48 4 18.77 

8 Zumorroda GCC Fund Zumorroda Investment 3.15 7 7.89 


Performance of Conventional Funds Tracking the S&P Pan Arab Composite Index 

(% change) 



1 Arabian Opportunities Audi Capital 9.93 3 16 

2 SGAM Equities MENA GLG Partners UK 9.9 2 16.24 

3 Magna MENA Fund Charlemagne Capital 8.42 - - 

4 Arab Gateway Fund SHUAA Capital 8.36 1 18.37 

5 Markaz Arabian Fund Kuwait Financial Centre 6.09 4 11.12 

6 Gulfmena Access Fund Gulfmena Investments 4.97 - - 

7 MENA Alchemy Fund Emerging A.M. Ltd 3.25 - - 

8 Beltone MENA Equity Beltone Asset Man. 1.14 - - 


172

Benchmarks 

Performance of Shariah Compliant Funds Tracking the S&P Saudi Arabia Shariah 

(% change) 



1 

HSBC Amanah Saudi HSBC Saudi Arabia 

Freestyle Equity Fund* Limited 

22.03 - - 

2 Jadwa Saudi Equity Fund Jadwa Investment 21.14 1 45.05 

3 


SAIB Saudi Companies Fund 

AM 

14.27 6 25.9 

4 Al Raed Saudi Equity Fund 


Investment Mgmt 

13.68 5 27.2 

5 Riyad Equity Fund 2 Riyad Capital 13.18 3 30.39 

6 Al Ataa Saudi Equity Fund 



12.35 

7 

Bakheet Investment 

Bakheet Saudi Trading Equity 

Group 

11.54 7 25.84 

8 Al Rajhi Local Shares Fund Al Rajhi Capital 11.35 4 27.86 

9 Islamic Saudi Equity Gateway SHUAA Capital S.A. 8.89 9 15.07 

10 Al Mubarak Saudi Equity ANB Invest 8.14 2 32.6 

11 AlAhli Saudi Trading Equity NCB Capital 5.2 8 25.14 

12 Al Mal Saudi Shariah Equity Al Mal Capital 4.54 - - 

13 

Al Nefaie Saudi Equity Al Nefaie Investment 

Trading Fund 

Group 

-1.7 - - 


*Inception January 7, 2012. 

173

Benchmarks 

Performance of Selected Conventional Funds Tracking various types of S&P GCC 

indices 

(% change) 



1 Vision Emerging GCC 



11.53 3 21.27 

2 United GCC Fund United Securities LLC 10.4 - - 

3 Al Musahem GCC Fund 



8.97 2 23.82 

4 SAIB GCC Equity Fund SAIB BNP Paribas A.M. 8.62 1 24.71 

5 Global GCC Large Cap 


House 

6.04 4 20.34 

6 GIC Gulf Premier Gulf Investment Co. 5.92 6 18.54 

7 

Securities & Investment 

SICO Khaleej Equity Fund 

Company 

5.91 7 13.68 

8 GCC Equity Fund Saudi Hollandi Capital 4.48 5 18.77 

9 Al Ahli Gulf Fund Ahli Capital Investment 3.97 10 4.50 

10 Zumorroda GCC Fund Zumorroda Investment 3.15 8 7.89 


*InvestAD – GCC Focus Fund redomiciled from the UAE to Luxembourg in 2012; 

data not presented ** One fund with negative three year returns was excluded. 

174

Benchmarks 

Performance of Conventional Funds Tracking various types of S&P Pan Arab 

Indices 

(% change) 



1 Makaseb Arab Tigers Mashreq Capital 21.07 1 31.59 

2 EFG-Hermes MEDA EFG-Hermes Holding 15.45 11 -12.42 

3 TNI MENA The National Investor 11.17 - - 

4 Alpha MENA Fund 

Franklin Templeton 


10.23 5 13.93 

5 Arabian Opportunities Audi Capital 9.93 4 15.99 

6 SGAM Equities MENA Amundi Luxembourg SA 9.92 3 16.24 

7 ING (L) Invest MENA 

ING Investment 


9.5 9 7.43 

8 Franklin MENA Fund 



9.43 6 11.74 

9 Magna MENA Fund Charlemagne Capital Ltd. 8.42 - - 

10 Arab Gateway Fund SHUAA Capital 8.36 2 18.37 

11 Markaz Arabian Fund Kuwait Financial Centre 6.09 8 11.12 

12 Al Mal MENA Equity Al Mal Capital 5.67 7 11.49 

13 Gulfmena Access Fund Gulfmena Investments Ltd 4.97 - - 

14 HSBC GIF MENA Fund HSBC Invest (Lux) SA 3.52 10 7.14 

15 MENA Alchemy Fund Emerging Asset Mgmt Ltd 3.25 - - 

16 Beltone MENA Equity Beltone Asset Mgmt 1.14 - - 


175

Benchmarks 


Performance of Shariah Compliant Funds Tracking SAIBOR 

(% change) 



1 Alawwal SAR Murabaha 

Al Awwal Financial 

1.78 3 3.58 

Services 

The Investor Company 

for Securities 

2 

The Investor SAR 

Murabaha 

1.7 1 6.87 

3 


Commodity 

Al Rajhi Capital 1.38 2 3.78 

4 Falcom SAR Morabaha 

Falcom Financial 

Services 

1.36 5 2.75 

5 SAR Int’l Trade Finance 



1.3 4 3.52 

6 MEFIC SAR Murabaha MEFIC 1.15 - - 

7 

Al Qawafel Commodities 

Trading Fund 

AlJazira Capital 1.08 8 1.98 

8 

SAIB BNP Paribas Asset 

SAIB Trade Finance Fund 


1.02 6 2.51 

9 KSB Murabaha Fund KSB Capital Group 0.88 10 1.72 

10 

Commodity Trading Fund 

(SAR) 

Riyad Capital 0.88 7 2.06 

11 

Al-Khabeer Liquidity Fund 

Al Khabeer Capital 

Hasseen 

0.83 - - 

12 Aldurrah SAR Liquidity Itqan Capital SJSC 0.82 9 1.78 

13 SHUAA Murabaha Fund Shuaa Capital S Arabia 0.7 13 1.43 

14 Al Badr Murabaha SAR Saudi Fransi Capital 0.64 11 1.57 

15 Al Yusr SAR Murabaha Saudi Hollandi Capital 0.62 16 1.06 

16 Jadwa SAR Murabaha Jadwa Investment 0.59 12 1.52 

17 AlAhli Saudi Riyal Trade NCB Capital 0.58 15 1.17 

18 

AlAhli Diversified SAR 

Trade 

NCB Capital 0.58 14 1.21 

19 SAIB Murabaha Fund SAIB BNP Paribas A.M. 0.37 17 0.76 


176

Benchmarks 

Performance of Conventional Funds Tracking SAIBOR 

(% change) 



1 Al Razeen Riyal Fund 



1.17 1 3.21 

2 

Al Arabi SAR Money 

Market 

ANB Invest 0.97 2 2.61 

3 Riyad Money Fund Riyad Capital 0.84 3 2.09 

4 SAR Money Market Fund Saudi Fransi Capital 0.71 4 1.81 

5 Saudi Riyal Money Market Saudi Hollandi Capital 0.55 5 1.58 

6 Al Ahli National Investment NCB Capital 0.51 6 1.13 


Performance of Shariah Compliant Funds Tracking LIBOR (USD) 

(% change) 



1 

Emirates Islamic Money Emirates NBD Asset 

Market 


2.02 - - 

2 USD Commodity Mudaraba Al Rajhi Capital 1.42 1 3.75 

3 USD International Trade Fin. 



1.15 2 3.05 

4 Aldurrah liquidity fund USD Itqan Capital SJSC 0.82 4 1.77 

5 Al Badr Murabaha Fund USD Saudi Fransi Capital 0.75 5 1.42 

6 AlAhli International Trade NCB Capital 0.68 6 1.37 

7 Commodity Trading Fund ($) Riyad Capital 0.4 7 1.03 


177

Benchmarks 

Performance of Conventional Funds Tracking LIBOR (USD) 

(% change) 



1 Al Razeen Dollar Fund* 



1.03 1 2.91 

2 SICO Money Market Fund Securities & Inv. Co. 0.87 - - 

3 USD Money Market Fund Saudi Fransi Capital 0.81 2 1.44 

4 AlAhli Short-Term Dollar NCB Capital 0.71 3 1.33 

5 Riyad Money Fund (USD) Riyad Capital 0.53 4 1.2 

6 US Dollar Money Market Saudi Hollandi Capital 0.31 5 0.83 

7 Global USD Money Market 


House 

-0.32 6 -1.15 


* Invests in ‘non-interest’ bearing instruments. 

178

Benchmarks 


Performance of Selected Conventional Fixed Income Funds 

(% change) 



1 Makaseb Income Fund Mashreq Capital 19.36 1 34.48 

Emirates MENA Fixed Income Emirates NBD 

2 

Fund (I Share Class - Income) Asset Management 16.61 - - 


3 

(I Share Class - Accumulation) Asset Management 15.91 - - 


4 

Fund (A Share Class - Accum) Asset Management 15.91 - - 

5 FFA Fixed Income MENA Fund FFA Capital Ltd. 15.3 6 16.48 

EFG-Hermes MENA Fixed EFG-Hermes 

6 

Income Fund 

Holding 

14.8 - - 

7 Falcon Menasa Bond Fund Falcon PrivateBank 14.16 - - 


8 

Fund (B Share Class - Accum) Asset Management 13.98 - - 


9 

Fund (C Share Class - Accum) Asset Management 13.62 - - 

10 Al Mal MENA Income Fund Al Mal Capital 13.17 3 22.2 


11 

Fund (C Share Class - Income) Asset Management 11.73 - - 

FFA Fixed Income MENA Fund 

12 FFA Capital Limited 11.04 

(B Class) 

2 28.83 


13 

Fund (B Share Class - Income) Asset Management 10.13 - - 

Rasmala GCC Fixed Income Rasmala 

14 

Fund 

Investment Bank 

9.39 5 19.72 


15 

Fund (A Share Class - Income) Asset Management 

8.7 - - 

16 Al Dana GCC Income Fund 

Commercial Bank 

of Dubai 

8.32 - - 

17 GIC Gulf Bond Fund 

Gulf Investment 

Corporation 

6.64 4 20.46 

18 Markaz Fixed Income Fund 

Kuwait Financial 

Centre 

4.78 7 12.42 


179

Benchmarks 

Performance of Selected Sukuk Funds 

(% change) 



Mashreq Al Islami Income 

1 

Fund 

Mashreq Capital 13.35 1 32.61 

BLME Sharia'a USD High 

2 

Yield Income A 

BLME 11.82 - - 

Emirates Global Sukuk Fund 

Emirates NBD Asset 

3 USD Institutional Share Class 


(Accumulation) 

10.84 5 19.51 



4 USD A Share Class 


(Accumulation) 

10.68 6 18.93 

Emirates Global Sukuk Fund Emirates NBD Asset 

5 

- B Acc 


9.93 - - 

BNP Paribas Hilal Income BNP Paribas 

6 

Fund (Class I) 

Investment Partners 

7.28 2 25.2 

7 Jadwa Global Sukuk Fund Jadwa Investment 7.15 7 17.04 


8 

Fund (Class P) 


7.13 3 24.68 

Rasmala Investment 

9 Rasmala Global Sukuk Fund 

Bank Ltd 

6.86 8 14.6 


10 

Fund (Class C) 


6.82 4 23.75 

11 Al Hilal Global Sukuk Fund Al Hilal Bank 6.5 - - 



12 USD Institutional Share Class 


(Income) 

6.46 - - 

Emirates Global Sukuk Fund Emirates NBD Asset 

13 

USD A Share Class (Income) Management Limited 

6.31 - - 

Global Sukuk Plus Fund 

14 

(Class A) 

QIB (UK) 5.67 11 11.21 

15 Tharawat Sukuk Fund 

Tharawat Investment 

House B.S.C. 

5.42 12 10.77 

BLME Umbrella Fund SICAV- 

16 SIF - Shariah USD Income 

Fund (Class B) 

BLME Umbrella Fund SICAV- 

17 SIF - Shariah USD High Yield 

Fund (Class B) 

Bank of London and 

The Middle East PLC 

Bank of London and 

The Middle East PLC 

3.83 9 12.79 

3.71 10 12.38 


180

Benchmarks 


Amin El Kholy – Managing Director 

Arqaam Capital 

Q/ Please describe your firm’s activities in the GCC 

region asset management industry - a) Description b) 

Size c) Organizational set-up d) Investor profile 

A/ Arqaam Capital was set up as a specialist Emerging 

Markets investment bank with seven business lines including 

Asset Management, and offices in the UAE, Lebanon, Libya, Egypt and the UK. 

• Asset Management activities at Arqaam Capital started on December 1 st 2009 

with the launch of the Arqaam Alpha Fund - a long/short hedge fund with an emphasis 

on risk-budgeting and management to preserve capital - investing in the MENA markets 

(performance since inception is +11.0% vs. -1.2% for the S&P Arabian Capped Index 

with volatility at 6.4% versus 12.7% and a beta of 0.4). 

• On May 1 st 2011, we launched the Arqaam Value Fund, a bottom-up, long only 

fund which also invests in MENA. The fund uses a combination of GARP and Value 

styles in mid and large-cap stocks, preferably uncovered by sell-side analysts and 

undiscovered, to build a concentrated portfolio of 20-25 positions with no regard to the 

weight of stocks in the index (performance since inception is +18% versus -5.9% for the 

S&P Arabian Capped Index with a lower volatility, alpha of 12.8% and a beta of 0.61). 

b) Total AUMs of the firm stand at USD 112 million as at the end of December 

2012 split as follows: Alpha Fund 52.6 million, Value Fund 59.3 million. 

c) The Asset Management team at Arqaam is made up of 8 staff, including CIO, 

portfolio managers, analysts and traders. The team is supported at corporate level by the 

sales team, client services, operations and the Chief Risk Officer. 

d) The client base of the current funds is predominantly institutions from the GCC 

region as well as a number of HNW/UHNW individuals. 

181

Benchmarks 

Q/ What have been the main drivers of your choice for fund domicile? Have you 

made any changes to the domicile of your funds? 

A/ Both funds are currently Cayman domiciled. Future planned funds would be European 

UCITS. No changes to the domicile of the current funds have been made or are planned. 

Q/ What are the fee trends for your funds/portfolios? 

A/ From the start, we placed emphasis on providing better value to investors in 

differentiated products. For the current funds, management fees are 1.5%, and 

performance fees are 20% of gains above an annual hurdle rate of 10%. The Value Fund 

also has a share class with management fees of 1% and performance fees of 20% with 

no hurdle rate. 

Q/ What have been trends in fees for your services in the last three years? 

A/ The fee structure has not changed, but this is predominantly because when we 

launched our funds, both of which are considered alternative/hedge funds, we set the 

fees at a level in-line with what most long-only regional funds charged at the time to offer 

better value to the clients. This was in anticipation of a reduction in fees for more 

conventional funds following the lead of international competitors. Future fund launches 

particularly for mutual funds, are likely to follow a similar pricing strategy to be in line-with 

the best priced funds in that category (typically around 1%). 

Q/ What have been trends in flows ? 

A/ In 2011, there was a three-fold increase in our AUMs from USD 25 million to USD 100 

million. We have seen only a marginal increase year-to-date in 2012, but it is worth 

bearing in mind that we have only started marketing our funds to a wider set of investors 

since October 2012. 


A/ The three-fold increase in 2011 was based on good performance in our first fund and 

the launch of an attractive and differentiated vehicle (the Value Fund) which allowed us 

to receive new fund flows from existing investors. 

182

Benchmarks 



A/ The current range of products has capacity limits in place and is exclusively aimed at 

institutions (regional and international) and, therefore, does not compete with the retailoriented 

conventional offering from large regional banks. Given the superior performance 

and fee structure, we expect to gain markets share at the expense of regional investment 

banks targeting the same institutional/HNWI client base. There is only one international 

direct competitor for the Alpha Fund – no other long/short funds have performed well 

enough to present competition. The Value Fund is a highly differentiated strategy and 

faces no direct competition. Given the pricing structure and the nature of the fund, we do 

not see regional competition particularly on performance, but our funds present 

substitute offerings to conventional long only funds offered by international firms with a 

presence in the region. Alpha Fund competes by offering better risk management and 

capital preservation while the Value Fund offers superior returns also with lower volatility 

and lower correlation to the index. 

Q/ Do your funds have ratings from agencies such as S&P? 

A/ We do not currently have ratings with S&P, but are initiating the process in the first 

week of December 2012. 

Q/ What is the impact – if any - of recent regulatory changes on your business? 

A/ Currently, the impact of the regulations relating to mutual funds is minimal as we do 

not seek to compete for the retail segment on-shore. Any business we obtain now is as a 

result of a reverse-enquiry basis within the DIFC. However, for future development of the 

business, the new regulations in the UAE in particular as they stand now, will have the 

impact of restricting the choice and quality of fund available to investors by restricting 

that choice to a few large institutions. For future products, we would look to partner with 

the right on-shore institutions who would offer products to their client base managed by 

us. 


A/ In line with Arqaam’s positioning as a specialist Emerging Markets investment bank, 

we are on track to expand our product offering beyond the MENA region, in which we 

183

Benchmarks 

have included Turkey for both our existing funds from inception. The next phase of our 

expansion is in two directions. The first, having established the track record in the two 

existing innovative and differentiated products, is to actively market our existing funds to 

institutional clients regionally and internationally. In parallel with this, we are seeking to 

grow our product range in several ways. The first is to launch one or two more valueadded, 

differentiated and limited capacity offerings (similar to the existing funds) aimed 

at a select group of investors, which are likely to cover a wider geographic scope and/or 

other asset classes. The second is to offer better priced and better managed 

conventional products where we see the market is still lacking depth and quality in this 

type of offering, to be aimed at the retail client in collaboration with partners who can 

access and service this type of client base. Finally, we are in the process of designing 

and launching a discretionary managed portfolio/managed account service aimed at 

HNWI/UHNWI and institutions. Expansion plans could also include strategic initiatives 

which would allow for any or all of the following; expanding to a wider geographic region 

for attractive investments, obtaining seeding for new funds and securing a steady flow of 

future AUMs. 

Q/ What is your investment outlook ? 

A/ We are more positive on the outlook for the Middle East and North Africa than we 

have been for at least two years. Accommodative monetary policy, oil prices at good 

levels, fiscal stimulus and, finally, some evidence of political stabilisation in key markets 

is seeing regional growth regain speed. This comes at a time when the rest of the world 

seems to be slowing down. We believe MENA is set for another period of 

outperformance relative to emerging markets as the recent ‘risk-on’ trade in global 

markets loses steam. We believe that concerns over growth in the US and China will 

impact corporate earnings and weigh on risk assets in Q4. MENA markets typically 

outperform in such periods, notwithstanding the importance of materials to MENA 

earnings. Higher dividend yields will provide further support to MENA markets. 

It is important to note though that this is unlikely to be a ‘wave’ similar to what we have 

witnessed in the past (2005, 2007) where all fund and managers do well with the rising 

tide. Being selective will be the key to performance. As evidence of this, we highlight the 

fact that while the S&P Arabian Capped Index is up 3% YTD to end of October 2012, the 

Value Fund is up over 22% for the same period. 

184

Benchmarks 

On a country level we expect to see interest return to Qatar, now at a compelling 10% 

discount to MENA, which may not be triggered in full until 2013 with improved earnings. 

However, it is a theme worth buying through the last quarter of 2012 as the downside is 

limited. Saudi Arabia and UAE also offer selective opportunities, often beyond the index 

heavy-weights, as does Turkey. We also see selective opportunities in Egypt if the 

market corrects to lower valuations than the levels at the end of October 2012, albeit with 

higher expected volatility as political risk remains elevated but (in our opinion) overstated. 

Risks remain from the geo-political tensions and concerns over succession planning in 

several countries as well as residual concerns over global risk aversion infecting regional 

markets. These risks have to be managed carefully and this again calls for selectivity in 

investment. 

185

Sharia Compliant Funds 

Global Background 

Relative increase in GCC share of global sharia compliant fund assets 

Global data continue to indicate that fund managers located in the GCC control over half 

of global sharia compliant fund assets. GCC fund assets account for a greater share of 

the available dataset in this year survey compared to 2011. Some official data are 

available for the GCC on sharia compliant funds. In Bahrain, there were 98 local and 

foreign sharia compliant funds (down from 101 in 2011) and their assets stood at 

US$ 2,496 million at the end of October 2012 (up from US$ 1,692 million in 2011) 

according to the Central Bank of Bahrain. In Kuwait, there were 54 locally 

incorporated sharia compliant funds as of June 2012 according to the Central Bank. 

Domestic sharia compliant fund assets stood at US$ 674.8 million (US$ 800 million in 

2011) and foreign sharia compliant fund assets were US$ 66 million (roughly unchanged 

from 2011). In Saudi Arabia, 158 were sharia compliant (155 in 2011), according to 

Saudi Stock Exchange (Tadawul) data covering 244 funds. 

Breakdown of Sharia Compliant Fund Assets by Region 


by Number of Funds 

by Fund Assets 

M ENA-e x 

GCC 

1.8% 

GCC 

32.7% 

N. 

America 

2.0% 

Africa ex- 

M ENA 

2.6% 

N. 

America 

9.6% 

M ENA-e x 

GCC 

0.2% 

Africa ex- 

M ENA 

1.9% 

Asia 

28.5% 

Europe 

8.6% 

Asia 

52.2% 

GCC 

56.5% 

Europe 

3.3% 

Source: Lipper, a Thomson Reuters company *Lipper largely omit Bahrain 

domiciled funds. 

189


Saudi Arabia, Malaysia, Bahrain are the main sharia fund management centres 

Fund managers located in Saudi Arabia continued to dominate the sharia 

compliant fund segment accounting for about half global assets. By fund domicile, 

Saudi Arabia accounts for 42.6% of the total, followed by Malaysia at 30.8%. US 

comes in next in terms of asset size. The figure for the US reflects the activities of 

Saturna Capital, in particular. South and South East Asia and GCC are the natural focus 

for sharia compliant fund industry expansion given their Muslim populations and growing 

financial sophistication. There is a close relationship between fund manager location and 

fund domicile reflecting regulations in the main markets. A potential hindrance to the 

growth of funds across borders in this segment is difference amongst jurisdictions as to 

the strict definitions of sharia compliance of various instruments. 

Breakdown of Sharia Compliant Fund Assets by Country 


Breakdown by Domicile* 

Kuwait 

2.3% 

Other 

12.5% 

Luxembourg 

3.4% 

USA 

8.5% 

Saudi Arabia 

42.6% 

Malaysia 

30.8% 

Source: Lipper, a Thomson Reuters company *Lipper largely omit Bahrain 

domiciled funds. 

190


Number of Sharia Compliant Funds by Type* & Domicile 


Number of Funds 

300 

250 

200 

150 

100 

50 

Other 

Money Market 

Sukuk 

Equity 

0 

Africa ex- 

M ENA 

As ia Europe GCC M ENA-e x 

GCC 

N. Am erica 

Source: Lipper, a Thomson Reuters company *Category titles are kept 

consistent with conventional funds for comparison 

By fund count, 52% of sharia compliant funds were domiciled in Asia, 32.7% in GCC, 

and 8.6% in Europe. By assets, 56.5% were in GCC, 28.5% in Asia, and 10% in US. 

Sharia Compliant Fund Assets by Type* & Domicile 


25 

US$ Billion 

20 

15 

10 

Other 

Money Market 

Sukuk 

Equity 

5 

0 

Africa ex- 

M ENA 

Asia Europe GCC MENA-ex 

GCC 

N. America 

Source: Lipper, a Thomson Reuters company *Category titles are kept 

consistent with conventional funds for comparison 

191


Top 5 Sharia Compliant Mutual Funds in the World by Assets 


Rank Fund Name Type* Domicile AuM 

1 Al Ahli Saudi Riyal Trade Money Market S Arabia 3,464 

2 International Trade Finance Fund Money Market S Arabia 2,539 

3 Amana Growth Fund Equity USA 2,242 

4 Al Rajhi Capital SAR Commodity Money Market S Arabia 2,102 

5 Al Ahli Diversified Saudi Riyal Trade Money Market S Arabia 1,647 

Source: Lipper Rankings, Lipper, a Thomson Reuters company *Category 

titles are kept consistent with conventional funds and may not reflect the exact 

terminology used by individual fund management firms. 

Top 5 sharia compliant fund rankings by assets is largely the same as in 2011. The only 

change is that the international Trade Finance Fund from Saudi Arabia has moved to 

second position and the Amana Growth Fund slipped one notch. Amana Growth Fund is 

still the largest sharia compliant equity fund. The top spot is still held by Al Ahli Saudi 

Riyal Trade Fund. All of the funds in the top 5 list have higher assets than at end-2011. 

192


Focus: Islamic Funds 

Current Status and New Markets 

Detlef Glow– Head of EMEA Research - Lipper 

Karim Arafa - Islamic Funds Analyst - Lipper 

Overview 

The Islamic fund universe has come a long way in 

the last 20 years. In 1993, there were only ten 

Islamic funds available. Today, there are 626. 

Starting with the financial crisis in 2008, Islamic 

funds experienced a trend of increasing yearly 

launches. However, it seems this growth pattern 

has halted, with only 34 new funds launched this 

year to date. 

New Fund Launches 

(annual data except for 2012) 

70 

60 


50 

40 

30 

20 

10 

40 

66 

59 

34 

0 

2009 2010 2011 Sep-2012 

Source: Lipper, a Thomson Reuters company 

193


While the reduction in new launches may be a regular market fluctuation, sukuk issuance 

has increased exponentially over the past few years. This surge shows sukuk is a 

preferred investment option, possibly affecting the already low demand for Islamic funds. 

Global Sukuk Issuance 

(US$ billion) 

US$ billion 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

2008 2009 2010 2011 2012E 2013F 

Source: Thomson Reuters Zawya IFG 

The concentration of Islamic funds is seen mainly in the Gulf Council Countries (GCC) 

and Malaysian markets which account for over 80% of all Islamic funds. Only 36 Islamic 

funds are registered for sale in Europe and 10 funds in the Americas. 

Market Share by Sales Registration as of September 30, 2012 (Islamic Funds Only) 

(US$ billion) 

Americas 

1% 

Other 

10% 

Europe 

6% 

Malaysia 

34% 

GCC 

49% 


194


The predominance of Islamic funds in the GCC correlates with the concentration of 

wealth in the region. Since the Asia-Pacific region has the largest Muslim population, the 

high number of Islamic funds registered for sale in the region is not surprising. And, 

according to the World Islamic Competitiveness Report by Ernst & Young, the Islamic 

finance infrastructure is relatively developed in only a few countries, mainly in the GCC 

and Malaysia, further explaining the concentration of Islamic funds. 

Since Islamic investors have a limited scope of products in which they can invest, they 

often resort to Islamic products such as sukuk and fixed-term deposits as well as real 

estate investments. These investors need access to other products such as mutual funds 

if they want to diversify their portfolios. This demand is shown by a number of surveys 

that have concluded that Muslims living in Western countries complain about the lack of 

Islamic products offered in their countries. This demand is creating opportunities for 

Islamic fund managers who might currently concentrate their activities only in large 

markets for Islamic funds, such as Malaysia and the GCC. 

Estimated Net Flows in Shariah-Compliant Funds 

(US$ million) 

4,500 

3,500 

Fund of Funds Mixed Assets Bonds 

Other Money Market Equity 

US$ billion 

2,500 

1,500 

500 

(500) 

(1,500) 

2008 2009 2010 2011 2012E 


195


Fund Flows 

In terms of assets under management, Sharia-compliant funds (US$ 37.6 billion as of 

September 30, 2012) make up only a small part of the global fund industry at the 

moment, but this does not mean the industry is in bad shape. Rather, the opposite is the 

case; the sector is showing, in general, a healthy growth pattern, with net inflows of 

US$4.5 billion in 2012 as of September 30. 

The asset mix of the net fund flows shows that Islamic investors are looking for safe 

havens, since money market products enjoyed the majority of the net inflows (US$ 2.547 

billion), followed by bond funds (US$ 1.055 billion), while equity funds received (US$ 

0.691 billion). Mixed-asset funds showed inflows of US$ 0.078 billion, while funds 

investing in other asset classes had inflows of US$ 0.0597 billion and the assets under 

management of funds of funds grew by US$ 0.0568 million. 

Market Share per Asset Type by Net Flows in Shariah-Compliant Funds 

(September 2012) 

Equity 

15% 

Fixed Income 

24% 

Fund of Funds 

1% 

Money Market 

57% 

Others 

1% 

Mixed Assets 

2% 


With US$ 1.371 billion, 31% of these flows came from the GCC. With regard to wealth 

distribution in the region, it is no surprise that the majority of these flows came from 

Saudi Arabia (US$ 1,329 million), followed by the United Arab Emirates (UAE) (US$ 209 

196


million), while there were outflows in Bahrain (US$ 101 million), Kuwait (US$ 29 million), 

Oman (US$ 28 million), and Qatar (US$ 7 million). 

Distribution of Net Fund Flows in the GCC by Country 

(September 2012) 

1,400 

1,200 

1,000 

US$ billion 

800 

600 

400 

200 

0 

(200) 

(101.5) (29.8) (28.3) (7.9) 

1,329.8 

209.0 

Bahrain Kuw ait Oman Qatar S. Arabia United Arab 

Emirates 


The general distribution pattern of the fund flows and sales registrations implies that 

Islamic fund managers are focusing on the Malaysian and GCC markets. This is leading 

to a lack of available investment instruments for Islamic investors in other parts of the 

world. Even though some fund promoters haven’t had the expected success with their 

products in the past, there is a growing demand for well-managed Shariah-compliant 

funds in Western countries because of the increasing wealth of the Muslim population 

within these countries. 

One lesson fund promoters can learn from the past is that Islamic funds did not seem to 

be efficient enough to divert conventional investors to tap into the Islamic fund market. 

Some of these funds didn’t show competitive performance and/or transparency. In 2010, 

Cologne-based Meridio AG launched its Luxembourg-domiciled Islamic mutual fund, but 

197


it was liquidated a year later because of lack of demand. The third largest German bank 

at the time—Commerzbank—liquidated its fund in 2005 for the same reason. 

One example of an asset management company that has realised the opportunity for 

Shariah-compliant products in Europe is the Kuala Lumpur-based CIMB-Principal Islamic 

Asset Management. CIMB-Principal is a joint venture between the CIMB Group and 

Principal Global Investors (PGI). CIMB-Principal launched three UCITS-compliant 

Islamic equity funds in Ireland, a European funds hub for cross-border distribution. 

According to the European UCITS law, CIMB-Principal can now passport its funds to 

other European countries and distribute them without running them through a complete 

new registration process. Even though it is too early to evaluate whether this initiative 

has been a success, this move shows that the asset management industry has identified 

the growth potential for Islamic funds in Western countries. 

Outlook 

In our opinion, it will be crucial for the success of the Islamic asset management industry 

in Western countries to create and launch funds that have a clear focus. In addition, the 

performance of these funds needs to be in line with the expectations of investors. It is 

important that these funds are comparable with other funds sold in the markets. This 

means Islamic funds need to have the same level of sophistication and transparency. 

Fund management companies need to bring their processes, especially in terms of 

reporting standards, into line with the general market standards of the Western asset 

management industry in order to attract investors in these markets. 

The crash in the real estate markets of the past few years has shown that the focus of 

Islamic money on real estate markets has added a risk to investors’ portfolios (according 

to the latest Ernst & Young world Islamic report of assets invested in this sector). This 

risk could have been avoided by broader diversification. With regard to these 

experiences, investors have learned their lesson and now search for more diversified 

products. This demand for diversification in Shariah-compliant mutual funds could 

become a key driver for the growth of Islamic funds all over the world. 

198


From our point of view a well-managed and transparent Shariah-compliant fund has the 

potential to attract not only Islamic investors, but also other types of investors provided 

the fund shows competitive returns. 

The views expressed are the personal opinion of the authors and are not necessarily the 

views of Thomson Reuters. 

About the Authors 

Detlef Glow 

Head of EMEA Research, Lipper 

Detlef joined Lipper in 2005 as Head of Research, Germany and Austria, from FERI 

Wealth Management, where he was Director of Portfolio Management, managing 

segregated accounts for high-net-worth individuals. Prior to FERI, he spent nine years 

with tecis Holding AG, most recently as Head of Fund Research for tecis Asset 

Management AG. In this role he was responsible for quantitative and qualitative fund 

research for the tecis fund of funds, the HNWI accounts, and the recommended list of 

funds for the financial advisor arm of tecis. Detlef has an MBA focusing on Financial 

Services from the University of Wales/Cardiff as well as a BA in Business Administration. 

Karim Arafa 

Islamic Funds Analyst 

As a funds analyst for the Islamic Division at Thomson Reuters, Karim Arafa has 

analyzed numerous funds and has years of experience in the banking & finance industry, 

specifically in the investment, credit & risk management of Islamic products. Moreover, 

Karim is one of Thomson Reuter’s Islamic Finance Gateway Analysts and is responsible 

for creating various fund reports as well as the IFG daily and weekly briefings. 

199


MENA Overview 

In this dataset (comprising funds that are locally incorporated, or domiciled outside the 

MENA, but sponsored by a local firm, or those with a MENA aggregate/constituent 

geographic focus), 264 sharia compliant funds were identified in 2011. 63% of these 

were in Saudi Arabia. In 2012H1, there were 253 sharia compliant funds according 

to the sample data. 63% of these were in Saudi Arabia. There were 235 sharia 

compliant funds that had one of the MENA member states as their domicile in June 

2012. 

Number of Sharia Compliant Mutual Funds* 

(As of June 2012) 

Locally 

Funds by 

Incorporated Geographic 

Funds 

Focus 

Bahrain 11 - 

Kuwait 32 24 

Oman - - 

Qatar 3 3 

S. Arabia 160 96 

UAE 11 4 

Egypt 12 11 

Jordan - - 

Lebanon - - 

Morocco 2 2 

Tunisia 3 3 

Turkey 1 1 

GCC - 42 

MENA - 14 


200


In 2012H1, assets under management for locally domiciled sharia compliant funds 

in MENA increased to US$ 20.41 billion, or 24% of the MENA total. In 2011, locally 

domiciled sharia compliant funds in MENA had assets under management of US$ 18.97 

billion, or 22.5% of the MENA total for fund assets. 

Sharia Compliant Mutual Fund Assets 


Locally 

Incorporated 

Funds 

Funds by 

Geographic 

Focus 

Bahrain 173 - 

Kuwait 1,433 1,194 

Oman - - 

Qatar 72 20 

S. Arabia 18,366 16,011 

UAE 223 300 

Egypt 122 122 

Jordan - - 

Lebanon - - 

Morocco 16 16 

Tunisia 3 3 

Turkey 1 1 

GCC - 1,673 

MENA - 414 


Average fund assets continue to be the highest in Saudi Arabia driven by large money 

market funds. 

201


Average Mutual Fund Assets 


Locally 

Incorporated 

Funds 

Funds by 

Geographic 

Focus 

Bahrain 15.8 - 

Kuwait 44.8 49.7 

Oman - - 

Qatar 23.9 6.5 

S. Arabia 114.8 165.1 

UAE 20.3 74.9 

Egypt 10.2 11.1 

Jordan - - 

Lebanon - - 

Morocco 8 8 

Tunisia 1.1 1.1 

Turkey 0.5 0.5 

GCC - 39.8 

MENA - 29.6 


In 2012H1, in terms of funds by type, equity funds were the most numerous 

amongst sharia compliant funds accounting for 69% of the count, but these made up just 

31.5% of sharia compliant fund assets. Money market funds made up 16.2% of the 

count and 62% of sharia compliant fund assets. 

202


Types of Sharia Compliant Mutual Funds by Domicile 


Equity 

Sukuk 

Money 

Market 

Other 

Bahrain 10 - - 1 

Kuwait 24 - 4 4 

Oman - - - - 

Qatar 3 - - - 

S. Arabia 114 6 34 6 

UAE 7 3 1 - 

Egypt 10 - 1 1 

Jordan - - - - 

Lebanon - - - - 

Morocco 1 - - 1 

Tunisia 2 - - 1 

Turkey 1 - - - 


Assets of Mutual Funds by Type and Domicile 


Equity 

Sukuk 

Money 

Market 

Other 

Bahrain 169 - - 5 

Kuwait 878 - 248 306 

Oman - - - - 

Qatar 72 - - - 

S. Arabia 5,277 146 12,861 81 

UAE 154 67 2 - 

Egypt 116 - N/A 6.3 



Morocco - - - 16 

Tunisia 1 - - 2 

Turkey 1 - - - 


203


Average Assets of Mutual Funds by Type and Domicile 


Equity 

Sukuk 

Money 

Market 

Other 

Bahrain 16.9 - - 4.6 

Kuwait 36.6 - 62.1 76.6 

Oman - - - - 

Qatar 23.9 - - - 

S. Arabia 46.3 24.4 378.3 13.6 

UAE 21.9 22.4 2.2 - 

Egypt 11.6 - - 6.3 



Morocco - - - 15.9 

Tunisia 0.7 - - 1.7 

Turkey 0.5 - - - 


Share of Sharia Compliant Funds by Count and Assets * 

60% 

50% 

Share of sharia funds in country total 

Share of sharia funds AuM in country total 

40% 

30% 

20% 

10% 

0% 

Turkey 

Tunisia 

Morocco 

Lebanon 

Jordan 

Egypt 

UAE 

S.Arabia 

Qatar 

Kuwait 

Bahrain 


204


Breakdown of Sharia Compliant Funds by Country 


Breakdown by Numbers 

Breakdown by Assets 

Egypt 

4.5% 

UAE 

4.5% 

Qatar 

1.2% 

Other 

3.7% 

Bahrain 

4.5% 

Kuwait 

13.6% 

Egypt 

0.6% 

UAE 

1.1% 

Qatar 

0.3% 

Other 

0.4% 

Bahrain 

0.8% 

Kuw ait 

7.1% 

S.Arabia 

67.9% 

S.Arabia 

89.6% 


Trends by Fund Type (based on data for locally domiciled funds) 

Overview 

In 2012H1, sharia compliant fund assets increased by 8%, with estimated net 

inflows of US$ 1.5 billion. Sharia compliant money market funds were, again, the main 

driver. Money market fund assets increased by 11% and experienced net inflows of US$ 

1.32 billion. Equity fund assets increased by 1%, with net inflows of US$ 54 million. 

In 2011, sharia compliant fund assets decreased by 14%, with estimated net outflows of 

US$ 3.34 billion. In terms of types of funds, money market fund assets fell by 16%, with 

US$ 2.25 billion in net outflows. Contrary to this trade finance funds grew by 8.8% with 

estimated net inflows of US$ 526 million. The bulk of the movement in sharia compliant 

fund flows emanated from money market funds category. Equity fund assets fell by 10% 

205


and saw net outflows of US$ 896 million. Other fund categories witnessed US$ 322 

million in net outflows. 

Estimated Fund Flows in 2012H1 

(millions of U.S. dollars) 

Fund Assets Fund Type Fund Assets % Change Net Flows 


11,877 13,196 Money Market 11% 1,321 

480 612 Fixed Income 27% 131 

6,669 6,728 Equity 1% 54 

844 836 Other -1% (12) 


Estimated Fund Flows in 2011 


Fund Assets Fund Type Fund Assets % Change Net Flows 

2010 2011 

14,123 11,877 Money Market -16% (2,248) 

422 480 Fixed Income 14% 57 

7,429 6,669 Equity -11% (758) 

1,250 844 Other -32% (383) 


Top 10 MENA Sharia Compliant Mutual Funds by Assets 




2 SAR International Trade Finance Trade Finance Samba Cap & Invest 2,539 



5 HSBC Amanah Saudi Equity Fund Equity HSBC Saudi Arabia 731 

6 HSBC Amanah SAR Trading-ART Trade Finance HSBC Saudi Arabia 569 

7 Al Raed Saudi Equity Fund Equity Samba Cap & Invest 548 


9 Commodity Trading Fund (SAR) Trade Finance Riyad Capital CJSC 479 

10 AlAhli Saudi Trading Equity Fund Equity NCB Capital 423 

Source: Lipper Rankings, Lipper, a Thomson Reuters company 

206


Top 10 MENA Sharia Compliant Equity Funds by Assets 



1 HSBC Amanah Saudi Equity Equity HSBC Saudi Arabia 731 





6 Asayel Fund Equity Al Bilad Investment Co 189 

7 Al Rajhi Local Shares Fund Equity Al Rajhi Capital 157 

8 Al Safwa Investment Fund Equity National Investments 136 

9 Al Durra Islamic Fund Equity Global Investment House 133 

10 Al Saffa Saudi Equity Trading Equity Saudi Fransi Capital 103 


Top MENA Sukuk Funds by Assets 



1 Global Sukuk Plus Fund Sukuk QIB (UK) 213 

2 BLME Umbrella Fund Sukuk Bank of London ME 67 

3 HSBC Amanah Sukuk Fund Sukuk HSBC Saudi Arabia Ltd 58 

4 Emirates Global Sukuk Fund Sukuk Emirates NBD AM 53 

5 Al Ahli USD Sukuk & Murabaha Sukuk NCB Capital 47 

6 Mashreq Al Islami Income Sukuk Mashreq Capital 38 

7 BNP Paribas Hilal Income Sukuk BNP Paribas Inv. Part 23 

8 Al Hilal Global Sukuk Fund Sukuk Al Hilal Bank 22 



207


Top MENA Sharia Compliant Money Market Funds by Assets 




2 SAR Int’l Trade Finance Trade Finance Samba Cap &Invest 2,539 



5 HSBC Amanah SAR Trading Trade Finance HSBC Saudi Arabia 569 

6 Commodity Trading Fund SAR Trade Finance Riyad Capital 479 


8 Al Dar Money Market Fund Money Market Al Dar Asset Man. 230 


10 AlAhli International Trade Fund Money Market NCB Capital 199 


208


Global Background 

Exchange traded funds (ETFs) provide the performance of a basket of securities and are 

listed and traded on a stock exchange just like other stocks. Exchange traded products 

(ETPs) have similar characteristics to ETFs, but differ in terms of their structure. These 

are passive investment vehicles that provide transparency and flexibility and are 

relatively cost efficient. 

At the end of 2011, there were 4,221 ETPs and ETFs with assets of US$ 1.525 

trillion (+2.82% year-on-year) according to BlackRock. There were 3,011 exchange 

traded funds (+6.6% year-on-year) with assets of US$ 1.351 trillion in the world (+3% 

year-on-year). There were 193 ETP providers and ETPs were listed on 53 exchanges. 

73.5% of global ETF assets were concentrated in the Americas. US accounted for 

69.6% of global ETF industry assets. The next largest in terms of ETF assets was 

Germany and accounted for 7.7% of the global ETF industry. Top 8 countries 

accounted for 97.1% of global ETF assets. Currently, only the United Arab Emirates 

and Saudi Arabia have ETFs listed on their exchanges in the GCC region. 

Global ETF Assets Breakdown by Region 

December 2011 June 2011 

Europe 

19.7% 

Other 

0.2% 

Europe 

22.3% 

Other 

0.2% 

Asia/Pacific 

6.6% 

Asia/Pacific 

6.4% 

Americas 

73.5% 

Americas 

71.1% 

Source: BlackRock 

211


Regional Background 

This study identified 12 ETFs primarily focusing on the GCC and its constituents, 

or Egypt 1 . Eight of these are listed outside the region. There are also ETFs with a 

broader geographical focus which include some Middle East and North Africa exposure. 

Examples include emerging and frontier 2 market ETFs. 

There was no change in the number of locally domiciled ETFs in 2012 from end 

2011. The first ETF in the GCC region was listed on the Abu Dhabi Securities 

Exchange on March 25 th , 2010. This was the NBAD OneShare Dow Jones UAE 25 

ETF 3 . The second ETF in the region was listed on Tadawul in Saudi Arabia on March 

29th, 2010. HSBC Amanah Saudi 20 ETF was the first sharia compliant ETF domiciled 

in the GCC. Plans to launch Oman's first exchange-traded fund (ETF) were also put on 

hold in May 2011 with unfavourable market conditions and the tense political 

environment in the region being cited. Qatar Exchange CEO was quoted in October 

2012 that the exchange was working with a potential issuer for a shariah compliant 

ETF which may be launched in 2012. In Egypt, Beltone Financial is in the process 

of launching the first ETF to be listed and traded on the Egyptian Exchange 

1 Some ETFs have a number of share classes, however, and counting those would bring 

the count higher. 

2 DB X-Trackers S&P Frontier Index ETF, RBS Market Access MSCI Frontier Markets 

ETF, i-shares MSCI Frontier 100, Guggenheim Frontier Markets ETF, RBS MSCI 

Emerging & Frontier Africa ex- South Africa are frontier market ETFs which include 

MENA components. SPDR S&P Emerging Middle East and Africa ETF run by State 

Street Global Advisors includes some MENA exposure and has assets of US$ 91 million, 

but this ETF does not have GCC constituents and only limited ME exposure with 4.4% in 

Egypt and 3.4% in Morocco; South African exposure accounted for 90.7% of fund 

assets. 

3 This fund was renamed NBAD OneShare MSCI UAE ETF after the change of its 

benchmark. The fund also moved to physical replication instead of swap based 

replication. 

212


according to its website. Meanwhile, Van Eck filed plans to launch a Saudi Arabia ETF 

and a small cap Saudi Arabia ETF in May 2012. ETFs focusing on the region have yet 

to take off elsewhere in the world. MENA ETF assets remain small and have not 

grown meaningfully since 2010. The last ETF launched which is domiciled in the 

region was the HSBC Amanah Saudi 20 ETF, but its size remains small. ETFs domiciled 

in the GCC have struggled for a number of reasons. All are equity ETFs and investor 

appetite for equities remains weak. They have small sizes and, thus, are not 

attractive to institutional investors. Total expense ratios remain relatively high at 

about 1%. HSBC Amanah Saudi 20 ETF compares more favourably with a total expense 

ratio of 75 basis points. The other two ETFs domiciled in Saudi Arabia have also 

struggled despite non-resident foreigners being allowed to trade in these. Some possible 

reasons, in addition to the factors above, could be the absence of independent 

custodian, administrator, and market makers for the two Saudi ETFs. The index provider 

for these is Tadawul (Saudi Stock Exchange) rather than the major international index 

providers. 

213


MENA Focused Exchange Traded Funds* 

Sponsor ETF Name Focus Domicile Listing 

Van Eck 

Blackrock 

Van Eck 

RBS 

Soc.Gen. / 

Coast Inv&Dev 

WisdomTree 

Invesco 

Invesco 

Falcom 

Falcom 

HSBC 

NBAD 

Market vectors 

Egypt Index Egypt US 

i-shares MSCI 

GCC ex-Saudi 

Market Vectors 

Gulf States 

Market Access 

MSCI GCC 

Countries ex- 

Saudi Top 50 

Capped Index 

GCC ex- 

SA 

Ireland 


($ mn) 

NYSE Arca, 

Xetra 41.3 

LSE, Xetra, 

Euronext- 

Amsterdam 6.7 

GCC ex- 

SA US NYSE ARCA 10.7 

GCC ex- 

SA 

Luxembourg 

Deutsche 

Börse / 

Euronext 

Amsterdam 5.2 

Lyxor FTSE Coast 

Kuwait -40 Kuwait France LSE 15.9 

WisdomTree 

Middle East 

Dividend Fund ME US Nasdaq 11.9 

PowerShares 

MENA Nasdaq 

OMX MENA Ireland Borsa Italiana 5.3 

PowerShares 

MENA Frontier 

Countries Portfolio MENA US Nasdaq 15.93 

Falcom Saudi 

Equity S. Arabia S. Arabia Tadawul 13.5 

Petrochemical 

ETF S. Arabia S. Arabia Tadawul 4.1 

HSBC Amanah 

Saudi 20 ETF S. Arabia S. Arabia Tadawul 4.0 

NBAD OneShare 

MSCI UAE ETF UAE Ireland ADX 5.2 


*Dubai Commodities Asset Management also has an ETP. 

214

Bahrain 


Challenging Background 

Bahrain’s economy has been adversely impacted in recent years by a number of factors 

including domestic unrest and the retrenchment of European financial institutions leading 

to a relative erosion in its positioning as a regional business hub. The country’s 

population is estimated to have declined by 2.7% in 2011 according to data from 

Central Informatics and Telecommunication Organisation. This would be the first time the 

country experienced a population decline according to population data from the 

International Monetary Fund which stretch back to 1980. 

In August 2010, Moody’s cut Bahrain’s FX issuer rating from A2 to A3 citing a higher 

fiscal breakeven oil price, lack of large FX cushions comparable to the country’s 

neighbours, and reduced fiscal flexibility to potentially meet liabilities arising from the 

financial sector. Standard and Poor’s was the first 1 agency to cut Bahrain’s FX long term 

debt rating citing unrest in February 2011 to A- from A and to BBB (two notches above 

speculative grade) in March. In February 2011, Fitch also cut Bahrain’s long term FX 

issuer rating to BBB, down from A in February 2011, citing the adverse impact of unrest 

on the economy and the policy response of increased government spending. Bahrain 

had last been rated BBB by Fitch in 2001 when the average price of crude oil was 

US$ 22.8 per barrel. Given that the debt metrics in that period were not substantially 

worse than now, the rating appears to have been driven by an appraisal of the political 

dimension. Moody’s cut the country’s rating in May 2011 to Baa1 (three notches above 

speculative grade). 

Budget deficits despite record revenues 

In 2012, Bahrain budgeted expenditures of US$ 9.75 billion (+28.5%) and a deficit of 

US$3.04 billion. One policy response to domestic unrest was to raise current 

expenditures sharply in 2012 including some one off items. In 2013, spending mix will tilt 

to project expenditures with US$ 2.6 billion budgeted (+122% y-o-y). Budget is forecast 

1 However, S&P’s rating for Bahrain had been a notch above that of Moody’s after 

August 2010. 

217

Bahrain 

to register a deficit of 4.6% of GDP in 2012 due to a jump in expenditures. Deficit finance 

has meant bond issuance. Gross public debt rose to US$ 9.4 billion (+23.6% y-o-y and 

32.6% of GDP in 2011, up from 12.2% in 2006). 61.4% was domestic debt. 

Growth picks up driven by government stimulus 

In 2011, real GDP (base 2001) growth was estimated at up from 2.2%. Nominal GDP 

was estimated at US$ 29 billion. Expansion of government sector was the primary driver 

of output growth, along with the hydrocarbon and manufacturing components of 

economic activity. Real estate and business services sector contracted. Expansionary 

fiscal policy has boosted activity. In 2012, real GDP growth is estimated at 3.8% y-oy 

2 , Nominal GDP is estimated to have risen to US$ 31 billion. 

Real GDP growth is forecast to pick up further to 4.5% in 2013 driven by 

infrastructure expenditures, with nominal GDP projected to rise to US$ 32.4 billion. 


At the end of October 2012, in Bahrain, there were 23 conventional retail banks 

(domestic and fully licensed branches of foreign banks), 55 conventional wholesale 

banks, 6 Islamic retail banks, 20 Islamic wholesale banks, 13 bank representative 

offices, 49 entities with an investment business firm licence (including service providers), 

9 investment firm representative offices, and 152 insurance firms. 

There were 2,811 funds marketed in Bahrain in October 2012 according to data from 

the Central Bank of Bahrain (CBB). Total fund assets were US$ 8.24 billion. There 

were 122 locally incorporated funds. Total assets of locally incorporated funds 

amounted to US$ 5.09 billion. There were 62 companies sponsoring locally 

incorporated funds, of which 23 were based in Bahrain. 

2 

Bahrain Economic Development Board’s quarterly bulletin for 2012Q2 forecast 2012 

real GDP growth at 3.7% based on data series with 2001 as the base year. However, 

2012 real GDP growth based on revised series with 2010 as the base year was forecast 

at 2.4% (1.9% in 2011). Note that nominal GDP for 2011 was revised up by 12.2%. 

218

Bahrain 

There were 2,689 foreign funds at end-October 2012. Foreign funds had assets of 

US$ 3.15 billion. Citibank N.A. provided the most number of third party foreign funds, 

followed by other international banks. There were 98 sharia compliant funds (including 

domestic and foreign incorporated funds) with assets of US$ 2.5 billion. These were 

sponsored by 52 companies. 

Top Fund Sponsors by Number of Locally Incorporated Funds (11/2012) 


House 

16.1% 

Other 

67.7% 

SICO 

5.6% 

Mashreq 

4.0% 

Solidarity Ins & 

Assurance Co 

3.2% 


Corporation 

3.2% 

Source: Central Bank of Bahrain 

The number of funds marketed in Bahrain declined slightly in 2012. Number of 

locally incorporated funds declined by 5 according to data as of October, 

continuing the pattern set in the aftermath of the 2008 global slowdown. The picture had 

been brighter with sharia compliant fund numbers, with steady growth in the count in that 

segment, but these declined by 3 in the same period. The number of foreign funds 

declined by 22, the first period of decline since the start of our dataset in 2003. 

219

Bahrain 

Number of Mutual Funds 

(end of period) 

End of 

Locally 

Incorporated 

Foreign 

Funds 

Total Number 

of Funds 


Funds 

Period Funds 

2003 42 1,348 1,390 47 

2004 58 1,530 1,588 60 

2005 86 1,796 1,882 71 

2006 97 2,102 2,199 80 

2007 124 2,360 2,484 87 

2008 141 2,475 2,616 101 

2009 137 2,573 2,710 102 

2010 129 2,638 2,767 106 

2011 127 2,711 2,838 101 

Oct-2012 122 2,689 2,811 98 


Locally incorporated fund assets largely recovered the losses in 2010 from the previous 

year only to trace back. Foreign fund assets have been stagnant since 2009. however, 

sharia compliant fund assets have grown sharply in 2012. 

Mutual Fund Assets by Domicile and Assets of Local Sharia Compliant Funds 

(millions of U.S. dollars where relevant, end of period) 

Sharia 


Locally 

Incorporated 

Foreign 

Funds Total Funds 

Compliant 

Funds 

Period Funds 

2002 496 3,542 4,038 127 

2003 719 3,513 4,232 137 

2004 1,169 3,557 4,726 301 

2005 2,803 4,855 7,658 1,013 

2006 2,723 6,311 9,034 752 

2007 4,532 11,073 15,605 1,343 

2008 5,743 4,983 10,726 1,788 

2009 5,186 3,547 8,733 1,704 

2010 5,659 3,514 9,173 1,571 

2011 4,983 3,395 8,378 1,692 

Oct-2012 5,098 3,146 8,244 2,496 


220

Bahrain 

The number of foreign funds fell for the first time in 2012. The number of foreign 

funds in Bahrain fell from 2,711 in 2011 to 2,689 as at October 2012. The net increase in 

the number of foreign funds was 65 in 2010 and 73 in 2011. The number of locally 

incorporated funds fell in the same period. 


(millions of U.S. dollars, end of period, annual data except for October 2012) 

US$ million 

18,000 

16,000 

14,000 

12,000 

10,000 

8,000 

6,000 

4,000 

2,000 

- 


Locally Incorporated Funds 

Total Funds 

2002 2004 2006 2008 2010 Oct-12 


The combination of a rise in the number of foreign funds and a decline in foreign fund 

assets meant that overall average fund assets roughly halved from US$ 6.3 million at 

end-2007 to US$ 2.9 million at end-October 2012. 

Average assets under management for locally incorporated funds rose from US$ 17 

million in 2003 to US$ 42 million in October 2012. The number of local funds rose from 

42 to 141 in 2008, but has since been declining. Number of locally incorporated funds 

fell to 122 in October 2012. 

Average assets under management for sharia compliant funds was US$ 25 million 

in October 2012, up from US$ 17 million in 2011. The number of sharia compliant 

funds rose to 106 in 2010, but then declined to 98 as at end-October 2012. 

221

Bahrain 

Average Assets of Funds 

(millions of U.S. dollars, end of period, annual data except for October 2012) 

US$ million 

50 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

Fund Assets/ Number of All Funds 

Islamic Fund Assets/Number of Sharia Funds 

Locally Incorp Fund Assets/Number of Such Funds 

2003 2006 2009 Oct-12 


The growth rate of fund assets has continued to mirror that of equity markets due 

to the large proportion of equity fund assets in the total. 

Growth Rate of Fund Assets 

(percentage change y-o-y, end of period, quarterly data) 

80 

% change y-o-y 

40 

0 

-40 

Fund Assets S&P GCC Large Cap Index 

-80 

2002Q2 2004Q4 2007Q2 2009Q4 2012Q2 

Source: Bloomberg, Central Bank of Bahrain 

222

Bahrain 

Growth Rate of Fund Assets 



300% 

250% 

200% 

150% 

100% 

50% 

0% 

-50% 

-100% 

Locally incorporated funds 

Sharia compliant funds 

foreign funds 

2003 2006 2009 Oct-12 


The gross number of new funds (i.e. not taking into account funds that may have been 

wound down or not offered further) hovered at around 300 per year in 2003-2005, 

sharply spiking in 2006 at 689 with 353 coming in 2006Q1 alone immediately after GCC 

markets had peaked at the end of 2005. In 2011, the number of new funds was 246. 

There were 78 new funds during January to October, continuing to represent a 

significantly slower pace than in earlier years. 

223

Bahrain 

Number of New Funds 

(end of period, annual data except for 2012) 

800 

700 

Number of New Funds 

600 

500 

400 

300 

200 

100 

0 

2003 2006 2009 Jan-Sept 2012 


Number of New Locally Incorporated Funds 

(end of period, annual data except for 2012) 

Number of New Funds Incorporated 

30 

25 

20 

15 

10 

5 

0 

1994 1997 2000 2003 2006 2009 Nov-12 


224

Bahrain 

Breakdown of Locally Incorporated Funds by Type 


Breakdown by Number 

Breakdown by Assets 

Bond 

8.3% 

Bond 

10.9% 

Other 

33.9% 

Equity 

38.8% 

Other 

53.9% 

Equity 

25.2% 

Real Estate 

14.0% 

Money 

Market 

5.0% 

Money 

Market 

Real Estate 1.1% 

8.9% 


In terms of the profiles of investors in funds in Bahrain, the share of individuals’ in 

fund assets rose in 2012Q2 as a result of a decline in investments of institutions. 

Individuals’ fund assets rose to 33.7% of the total in 2012Q2 as institutional 

investors pulled back. In absolute terms, individuals’ assets peaked in 2008Q1 with 

US$ 8.73 billion in funds. This stood at US$ 2.78 billion in 2012Q2. In 2011, individuals’ 

fund holdings fell by US$ 5.5 million, while institutional holdings declined by US$ 789 

million. In 2012H1, individuals’ fund holdings rose by US$ 455 million, while 

institutional holdings declined by US$ 589 million. 

By source of funds, wholesale banks saw a US$ 236 million decline in fund assets 

in 2011 and US$ 258 million in 2012H1, while retail bank fund assets were roughly 

unchanged. Assets in funds offered by other institutions fell by US$ 530 million in 

2011, but rose by US$ 143 million in 2012H1. 

225

Bahrain 

Fund Assets by Investor Type 

(billions of U.S. dollars, end of period, quarterly data) 

US$ billion 

20 

18 

16 

Institutions Individuals 

14 

12 

10 

8 

6 

4 

2 

0 



Fund Assets by Distributor 

(billions of U.S. dollars, end of period, quarterly data) 

US$ billion 

20 

18 

Retail Banks Wholesale Banks Others 

16 

14 

12 

10 

8 

6 

4 

2 

0 



226

Bahrain 


Overview 

In 2012H1, fund assets in the dataset increased by 1% from end-2011. Overall 

assets of mutual funds domiciled in Bahrain for our dataset were largely unchanged with 

a net inflow of just US$ 9.1 million. Equity fund assets declined by 4% from end-2011. 

Fixed income fund assets under management rose by 9% in the same period. 





19 16 Money Market -15% (2.8) 

509 557 Fixed Income 9% 46.8 

807 774 Equity -4% (34.4) 

46 46 Other 1% (0.5) 


In 2011, overall assets of mutual funds domiciled in Bahrain for which data were 

available in the database fell by 10% year-on-year. Bahrain domiciled funds 

experienced an outflow of US$ 153 million. Equity fund assets decreased by 21% y-o-y. 

Fixed income fund assets under management rose by 35%, with most of the rise being 

attributable to net inflows. 




2010 2011 

15 19 Money Market 23% 3.5 

377 509 Fixed Income 35% 130.5 

1,022 807 Equity -21% (209.9) 

122 46 Other -62% (74.8) 


227

Bahrain 

Top 10 Bahrain Domiciled Mutual Funds by Assets 




2 GIC Gulf Bond Fund Bond Gulf Investment Corporation 160 

3 Global GCC Large Cap Equity Global Investment House 117 

4 GIC Gulf Premier Equity Gulf Investment Corporation 95 

5 SICO Khaleej Equity Fund Equity Securities & Investment Co 76 

6 NBK Gulf Equity Fund Equity Watani Investment Company 61 

7 Al Basha'er GCC Equity Equity Kuwait Finance & Investment 58 

8 Al Mada Investment Fund Equity National Investments Co 42 

9 Markaz Arabian Fund Equity Kuwait Financial Centre 42 

10 Makaseb Income Fund Bond Makaseb Funds Co BSC 35 


Equity Funds 

In 2012H1, Bahrain domiciled equity fund assets fell by 4% compared to end-2011 

and witnessed net outflows of US$ 34 million. Sector fund assets fell by 29%, while 

index fund assets increased by 12%. In 2011, Bahrain domiciled equity fund assets 

decreased by 21% year-on-year and witnessed net outflows of US$ 210 million. Sector 

fund assets decreased by 24% and index fund assets decreased by 20%. 

Top 10 Bahrain Domiciled Equity Funds by Assets 



1 Global GCC Large Cap Fund Equity Global Investment House 117 

2 GIC Gulf Premier Equity Gulf Investment Corporation 95 

3 SICO Khaleej Equity Fund Equity Securities & Investment Co. 76 

4 NBK Gulf Equity Fund Equity Watani Investment Company 61 

5 Al Basha'er GCC Equity Equity Kuwait Finance &Investment 58 

6 Al Mada Investment Fund Equity National Investments Co 42 

7 Markaz Arabian Fund Equity Kuwait Financial Centre 42 

8 Arab Bank MENA Fund Equity Al Arabi Investment Group 32 

9 NBK Qatar Equity Fund Equity Watani Investment Company 26 

10 SICO Gulf Equity Fund Equity Securities & Investment Co. 23 


228

Bahrain 


In 2012H1, fixed income fund assets domiciled in Bahrain stood at US$ 557 million. 

Assets were up by 9% from end-2011. Fixed income funds witnessed net inflows of 

US$ 47 million. Conventional fixed income funds saw inflows of US$ 51 million. 

In 2011, fixed income fund assets domiciled in Bahrain stood at US$ 509 million 

according to the dataset. Assets were up 35% during the same period. Fixed income 

funds witnessed net inflows of US$ 130.5 million. Sukuk funds saw outflows of US$ 

1.2 million, while conventional fixed income funds saw inflows of US$ 131.7 million. 

Conventional fixed income fund assets rose by 36% to US$ 505 million in the period. 

Top Bahrain Fixed Income Funds by Assets 




2 GIC Gulf Bond Fund Bond Gulf Investment Corp 160 

3 Makaseb Income Fund Bond 

Mashreq Capital 

(DIFC) Ltd 35 

4 

Royal Capital MENA Fixed Income 

Plus Bond Royal Capital PJSC 16 


229

Bahrain 

Focus: Industry Perspective 

Shakeel Sarwar – Head of Asset Management – 

Securities and Investment Company (SICO) 

Q/ Please describe your firm. 

A/ SICO was incorporated as a joint stock 

company in Bahrain in 1995. Our first fund was 

launched in 1998, a Bahrain dedicated fund. Since 

then, a family of GCC focused funds have been 

launched by SICO, including our flagship - Khaleej 

Equity Fund – in 2004. Additionally, we manage discretionary portfolios and third party 

funds. Currently, total Assets Under Management (AUMs) stand at approximately US$ 

600 million. SICO’s investor base is predominantly institutional and this has enhanced 

the stability of our operations. 

Q/ What were the trends in fund flows recently ? 

A/ Investors’ equity risk aversion is the single biggest challenge faced by the regional 

asset management industry which is predominantly equity focused. Capital losses from 

two market crashes (2006 and 2008) have badly hurt GCC investors. As a result, equity 

focused fund managers have been under pressure with regards to fund flows in the past 

3-4 years. In spite of this, as a result of winning several investment mandates SICO’s 

AUM has increased on a net basis during this period. Year-to-date in 2012, the overall 

AUM has increased by approximately US$ 30 million. 


A/ SICO has been successful in maintaining and growing its investment base while many 

competitors have been stressed. One reason behind SICO’s success has been the 

strong performance of its funds. Regional (and international) markets have been subject 

to several shocks since 2006, with the GCC among the worst performing equity markets 

for the past 7 years - with the S&P GCC index dropping 57% during this period. SICO 

funds, however, have performed robustly with our flagship fund, the Khaleej Equity Fund, 

generating a positive return of 6% during this period which is superior to its benchmark 

230

Bahrain 

as well as most of our peers. SICO’s fundamental based investment philosophy and 

processes, coupled with the collective experience and the calibre of the investment 

professionals in our asset management team has also enabled us to win investor 

confidence. Recently, S&P commended our Gold graded funds as having clear and 

disciplined investment processes. 

Q/ What are the latest developments with regards to SICO’s asset management 

business? 

A/ We are in the process of increasing the range and scope of our product offering by 

entering proactively into the fixed income space. Currently, the setting up of the SICO 

Fixed Income Fund is at an advanced stage. The fund’s objective is to generate income 

and seek capital appreciation by actively investing in a diversified pool of regional fixed 

income instruments. The regional conventional and shariah compliant fixed income 

market has been growing rapidly and SICO expects to capitalise on its future growth. 

Q/ Do your funds have ratings from agencies such as S&P? If so, what impact has 

it had on the growth of your business, if any? 

A/ In 2009, SICO’s funds became among the first GCC funds to be rated by S&P. 

During its annual review of 2012 - under its new ratings scheme - S&P assigned the 

‘Gold Fund Grading’ to the Khaleej Equity Fund (KEF), SICO Gulf Equity Fund (SGEF) 

and SICO Arab Financial Fund (SAFF). The Gold Fund Grading is presently the highest 

rating given to a regional mutual fund. In addition, SICO Kingdom Equity Fund (SKEF) 

obtained a Silver Fund Grading. The latest review is a reaffirmation of our sound and 

consistent investment process and strong track record. Therefore, it has enabled us to 

attract new investors. 

Q/ Bahrain is one of the leading financial centres in the GCC region. Would you 

provide a brief history of developments in the mutual fund regulatory framework in 

Bahrain? 

A/ Bahrain has one of the most advanced regulatory frameworks among regional 

financial centres. In 1992, Central Bank of Bahrain’s (CBB) predecessor, Bahrain 

Monetary Authority, issued the first set of rules related to Collective Investments 

Undertakings (CIU) which facilitated the development of the mutual fund industry. 

Subsequently, these rules were revamped in June 2007 when the CIU Module, within the 

231

Bahrain 

CBB Rulebook Volume 6 was issued. In April 2012, the CBB released the CIU module 

as a separate volume (Volume 7) which provided an extensive set of ‘best of class’ rules. 

Q/ What are salient features of volume 7 of the CBB rule book released in April 

2012 compared to the previous CIU module? 

A/ In Bahrain, we have come a long way in terms of regulations and we appreciate the 

efforts the CBB has put in developing new regulations to bring them in line with 

international standards. The salient features of Volume 7 are: 

• Modules which govern the authorisation/registration of Private Investment 

Undertakings (PIU) and Real Estate Investment Trusts (REITs) have been included. 

• A complete section on “Corporate Governance” has been included in the 

regulations. This new module provides details on criteria, selection and role of the board 

members. 

• A “Relevant Persons Module” has been included in the new regulations which 

provide clarity on roles and responsibilities of operator, trustee, fund manager, custodian, 

fund administrator, registrar and transfer agent, placement agent, investment advisor, 

external auditor, et cetera. 

• A module has been added on “CBB Reporting Requirements”. This module 

aims to increase the clarity for reporting requirements for all counterparties including the 

administrator, custodian, investment manager, and the operator. 

• Last, but not least, a complete section is devoted to 

“Liquidation/Deregistration”. This provides detailed information on how to close a fund, 

should that be needed. 

Q/ What is the impact of new regulations? 

A/ First, the new regulations with regard to REITs and PIUs will enable regional fund 

managers to setup these structures within the region. A PIU is a loosely regulated 

product for high net worth individuals/ institutions. 

232

Bahrain 

In addition, we believe that the new regulations provide increased transparency in terms 

of roles and responsibilities of various parties involved in the process. This, along with 

related rules - for example, liquidation of funds - will facilitate a smoother investment 

management process, in general. 

We also commend the improvement in corporate governance standards, which will 

further enable the regional asset management industry to move ahead despite turbulent 

market conditions. 

Q/ What is your investment outlook for 2013? 

A/ Overall, we are positive as we move into 2013. We are cognisant that many of the 

issues which were associated with the 2008 financial crisis still largely prevail. While the 

US economy tries to gain momentum, the Eurozone debt crisis, which has seen some 

serious progress attained this year, and continuing apprehension of a slowdown in 

China, make the environment still precarious. This global economic uncertainty transmits 

to GCC markets through volatile oil prices. Although current oil prices are healthy, future 

demand concerns are making investors nervous about the outlook for the GCC. The 

regional markets which have lagged their global peers look attractive at current levels. 

However, the kind of volatility which may prevail in 2013 demands a prudent and 

balanced approach to investing. 

233

Bahrain - Directory 

Oman 

Nr Company Phone Internet E-mail Address 

1 Ahli United Bank +973 17 585858 www.ahliunited.com info@ahliunited.com Building 2495, Road 

2832,, Al Seef District 428, 

P.O. Box 2424,, Manama, 

Kingdom of Bahrain 

2 Al Baraka Islamic 

Bank B.S.C. 

+973 17 535300 www.barakaonline.com/ baraka@batelco.com.bh P.O. Box 1882 Manama, 


3 Al Salam Bank +973 17 560000 www.alsalambahrain.com/ info@alsalambahrain.com P.O. Box 18282 Manama, 


4 Alpine Wealth 


+973 17 563333 www.alpinewealth.com/ info@alpinewealth.com P.O. Box 18266 Manama, 


5 Arab Bank P.L.C +973 17 549000 www.arabbank.bh/ P.O. Box 813 Manama, 


6 Bahrain Islamic Bank B.S.C. +973 17 546177 

www.bisb.com/ P.O. Box 5240 Manama, 


7 Bahrain Middle East 

Bank 

8 BankMuscat 

International 

+973 17 532345 www.bmb.com.bh/ requests@bmb.com.bh P.O. Box 797 Manama, 


+973 17508080 www.bankmuscat.com info@bankmuscat.com BMI Bank, World Trade 

Center, Manama, P.O. Box 

350, Manama, Kingdom of 

Bahrain 

9 Bank Al-Khair B.S.C. +973 17 566000 www.bankalkhair.com/ P.O. Box 31700 Manama, 


10 Bank of Bahrain & 

Kuwait 

+973 17 223388 www.bbkonline.com/ feedback@bbkonline.com P.O. Box 597 Manama, 


234


Oman 

11 BNP Paribas Asset 

Management B.S.C 

12 Capinnova 


B.S.C. 

13 Capital Growth 

Management W.L.L 

14 Capital Management 

House B.S.C. 

+973 17-866666 www.bnpparibas.bh gulf.communication@bnppariba 

s.com 

West tower 4th Floor King 

Faisal Highway Bahrain 

Financial Harbour Area 

P.O. Box 5253 Manama 

Bahrain 

+973 17 101010 www.capinnovabank.com/ contactus@capinnovabank.com P.O. Box 5507 Manama, 


+973 17 561 600 www.cgm.com.bh info@cgm.com.bh Almoayyed Tower Seef 

District Manama, Bahrain 

+973 17 510000 www.capitalmh.com/ info@capitalmh.com P.O. Box 1001 Manama, 


15 Capivest B.S.C. +973 17 502222 www.capivest.com/web/ info@capivest.com P.O. Box 5571Manama, 


16 Citibank N.A. +973 17 588588 www.citi.com/bahrain/bhgc 

b/consumer_banking/hom 

e/index.htm 

17 Credit Suisse AG +973 171 33111 www.creditsuisse.com/bh/en/ 

18 Delta Partners B.S.C. +973 16 101077 www.deltapartnersgroup.c 

om/about_us/locations/ma 

nama 

P.O. Box 548 Manama, 


Credit Suisse AG, King 

Faisal Highway, East 

Tower Building, East 

Tower Building, "Bahrain 

World Trade Center", 22nd 

floor, 

info@deltapartnersgroup.com P.O. Box 11712 Manama, 


19 Eskan Bank B.S.C +973 17 567890 www.eskanbank.com inquiries@eskanbank.com Seef Districts, Almoayyed 

Tower, PO Box 5370, Seef 

Area, Kingdom of Bahrain 

235


Oman 

20 Global Investment 

House (Bahrain) 

+973 17 210011 www.globalinv.net National Bank of Bahrain 

Tower, Bldg. No. 131, 

Office No. 191 , P.O.Box: 

855 Manama, Kingdom of 

Bahrain 

21 Gulf Finance House +973 17 538538 www.gfh.com Bahrain Financial Harbour, 

PO Box 10006, Manama, 


22 Gulf International 


23 Gulf One Investment 

Bank B.S.C. 

+973 17 534000 www.gibonline.com/ P.O. Box 1017 Manama, 


+973 17 102555 www.gulf1bank.com/ info@gulf1bank.com P.O. Box 11172 Manama, 


24 HDFC Bank +973 16 577000 www.hdfcbankbahrain.com 

25 Housing Bank for 

Trade & Finance 

26 HSBC Bank Middle 

East Ltd 

/ 



+973 17 225227 www.hbtf.com/ aaziz@hbtf.com.bh P.O. Box 5929 Manama, 


+973 17 569999 www.hsbc.com.bh/1/2/hom 

e 

27 ICICI Bank +973 17 576161 www.icicibankbahrain.com 

/index.html 



bahrain@icicibank.com P.O. Box 1494 Manama, 


28 Inovest B.S.C +973 17-155777 www.inovest.bh info@inovest.bh Bahrain Financial Harbour 

East Tower, 20th Floor 

King Faisal Street P.O. 

Box 18334 Manama 

Bahrain 

30 Instrata Capital BSC 973 17 388188 www.instrata.com/en P.O. Box 26300 Manama, 


31 Investcorp Bank +973 17532000 www.investcorp.com info@investcorp.com PO Box 5340, Manama, 


236


Oman 

32 Ithmaar Bank +973 17 584000 www.ithmaarbank.com/ P.O. Box 2820 Manama, 


33 Kotak Securities Ltd. +973 17 533121 www.kotak.com P.O. Box 20183 Manama, 


34 Kuwait Finance 

House 

35 Mashreqbank 

Psc.(Bahrain) 

36 Merrill Lynch 

International Bank 

Limited 

37 Mubasher Financial 

Services B.S.C 

38 National Bank of 

Bahrain 

+973 77777777 www.kfh.bh/en/ P.O. Box 2066 Manama, 


+973 17 504444 www.mashreqbank.com P.O. Box 1320 Manama, 


+973 17 530260 P.O. Box 10399 Manama, 


+973 17-556139 www.mubasherfs.com info@mubasherfs.net Euro Tower Building 11th 

Floor, Flat 112 Sanabis 

Area P.O. Box 75782 

Manama Bahrain 

+973 17 228800 www.nbbonline.com/ nbb@nbbonline.com P.O. Box 106 Manama, 



Kuwait - Bahrain 

Branch 

40 Sarasin-Alpen 

(Bahrain) B.S.C 

41 Securities and 


+973 17 583333 www.nbk.com P.O. Box 5390 Manama, 


+973 17 135 300 www.sarasin-alpen.com Sarasin-Alpen (Bahrain) 

B.S.C P.O. Box 5898, 34th 

Floor, West Tower, 

Bahrain World Trade 

Center, Manama, Bahrain 

+97317515000 www.sicobahrain.com info@sicobahrain.com BMB Building, 2nd Floor, 

Diplomatic Area, P.O. Box 

1331, Manama, Capital, 

Bahrain 

237


Oman 

42 Seera Investment 


43 Solidarity Islamic 

Insurance & 

Assurance Co. 

44 Standard Chartered 


+973 17 566533 www.seera.com/ info@seera.com P.O. Box 19373 Manama, 


+973 1758 5222 www.solidarity.cc mail@solidarity.com.bh Seef Tower - 9th Floor , 

Seef District , P.O. Box 

18668, Manama , Kingdom 

of Bahrain 

+973 17 223636 www.standardchartered.co 

m/bh/en/ 



45 State Bank of India +973 17 505160 www.sbibahrain.com/ sbibah@batelco.com.bh P.O. Box 5466 Manama, 


46 Tadhamon Capital 

B.S.C. ( c ) 

+973 17 103444 www.tadhamoncapital.com 

/index.php 

P.O. Box 75511Manama, 


47 TAIB Bank +973 17-533334 www.taib.com taib@taib.com TAIB Tower, Road 1702, 

Diplomatic Area, P.O. Box 

20485, Manama , Capital, 

Bahrain 

48 Takaud Savings and Pensions B.S.C. 

+973 17 520194 http://takaud.com/ Info@Takaud.com P.O. Box 65167 Manama, 


49 Tharawat Investment 

House B.S.C 

50 United Gulf Bank 

B.S.C 

51 Venture Capital Bank 

B.S.C 

+973 17-560777 www.tharawat.net info@tharawat.net Al Doha Tower 12th Floor 

Seef District P.O. Box 

75780 Manama Bahrain 

+973 17 533233 www.ugbbh.com/ info@ugbbah.com P.O. Box 5964 Manama, 


+973 17-518888 www.vc-bank.com contact@vc-bank.com Venture Capital Bank 

Building 7th and 8th Floor 

Road 1704 Diplomatic 

Area P.O. Box 11755, 

Manama, Bahrain 

238

Egypt 

Economic Background 

Uncertainty took its toll 

Egypt’s economy has been hit by political uncertainty leading to capital flight and 

reduced investment expenditures as well as a worsening in terms of trade due to high 

energy prices. In the 2011/2012 financial year, real GDP growth was estimated at 

2.2%, up from 1.9% in 2010/2011, but significantly below the 6.2% per annum 

average growth rate registered in the preceding five year period. Presidential 

elections were held in mid-2012 and a new constitution was adopted in December 

through a plebiscite. Parliamentary elections are scheduled to be held in early 2013. 

A policy response to domestic unrest has been fiscal expansion. Expenditures rose 

by +19.5% y-o-y to US$ 85 billion 33.8% of GDP). Wages (24% of budgetary spending) 

and interest expenditures (18% of spending) were both up by +29% y-o-y. Subsidies, 

grants, social expenditures (a whopping 40% of expenditures) were up by 22.8% y-o-y. 

Consolidated fiscal data estimates put the preliminary actual 2011/2012 cash deficit at 

EGP 171 billion (11.2% of GDP). Final draft budget for 2012/2013 spending of EGP 

533.7 billion (+13.6% y-o-y equivalent to about US$ 88.4 billion) was announced. Gross 

public sector debt rose to an estimated 78.6% of GDP (87% of which was domestic debt) 

in 2011/2012 (up from 70% in 2007/2008) as a consequence of chronic budget deficits. 

FX receipts adversely affected, but strong workers’ remittances 

The current account registered a deficit of US$ 7.9 billion (+30% y-o-y and 3.1% of GDP) 

in 2011/2012 driven by a trade deficit of US$ 31.7 billion and an investment account 

deficit, while services balance registered a surplus of US$ 12.1 billion and net transfers 

were US$ 18.4 billion. Central Bank faced a challenging macroeconomic environment 

and acted to maintain the value of the Egyptian Pound and achieved lower inflation 

- alas, at the expense of significant reserves. In a fine balancing act, it also assisted 

in the finance of the budget deficit directly and indirectly through the banking system. 

Egypt applied for a US$ 4.8 billion loan from the International Monetary Fund in August 

and an announcement was made in November that an agreement had been reached on 

a stand-by arrangement (SBA) and that Egypt’s request for the SBA was to be submitted 

to the IMF board. Renewed political tension and delay in some austerity measures led to 

241

Egypt 

Egyptian officials to ask for a deferment of the presentation of the request to the IMF 

board. The currency came under pressure and Central Bank took steps to conserve its 

foreign exchange reserves. 

Growth is forecast to pick up further in 2012/2013 to over +3% y-o-y. It is expected 

to be led by investment and consumption expenditures, while austerity measures will act 

as a drag on the recovery. 

Overview 

As of June 2011, there were 39 banks and 27 representative offices of foreign banks in 

Egypt. As of November 2012, there were 140 securities firms and 85 locally incorporated 

funds (12 were sharia compliant funds with assets of US$ 122 million). There were also 

offshore funds being sponsored by domestic firms. 

Locally Incorporated Funds 

(US$ million where relevant, end of period) 

End of Number of Fund Assets 

Period Domestic Funds 

1994 3 - 

1995 8 - 

1996 11 - 

1997 16 - 

1998 18 - 

1999 20 - 

2000 21 - 

2001 21 - 

2002 21 - 

2003 22 - 

2004 24 - 

2005 27 - 

2006 36 - 

2007 40 - 

2008 46 - 

2009 57 - 

2010 71 9,808 

2011 80 9,031 

Jun-12 85 9,893 

Source: Egyptian Stock Exchange, Lipper, a Thomson Reuters company 

242

Egypt 

Top Fund Management Companies 


by Number of Funds* 

by Fund Assets 

Al Ahly Funds 

Management, 7 

HC Securities 

2.9% 

Others, 10.7% 

Other, 23 

CI AM, 7 

Beltone AM, 11 

CI AM 

12.5% 

Beltone AM 

43.3% 

EFG 

Hermes, 16 

HC Securities, 

14 

Prime 

Investments, 11 

Al Ahly FM 

13.9% 

EFG Hermes 

16.4% 

Source: Websites, Egyptian Stock Exchange, Lipper, a Thomson Reuters company 

Top Fund Sponsor Companies 


by Number of Funds 


National Bank of 

Egypt, 7 

Al Watany Bank 

of Egypt, 4 

Others 

20.5% 


Egypt 

13.4% 

Banque Misr, 4 

Credit Agricole, 

4 

BoA 

3.8% 

Others, 62 

Commercial 

International 

Bank, 4 

HSBC 

5.5% 

NSGB 

9.5% 

CIB 

12% 

Banque Misr 

35.6% 


243

Egypt 

Breakdown of Domestic Funds by Type 



Other, 12 


Other Equity 

2% 4% 

Balanced, 10 

Equity, 34 

Money Market, 

29 

Money Market 

94% 


Breakdown of Domestic Funds by Type 





14% 


1.2% 

Conventional 

86% 

Conventional 

98.8% 


244

Egypt 

Trends by Fund Type (based on data for Egypt domiciled funds) 

Overview 

In 2012H1, fund assets in the dataset increased by 10% from end-2011. These 

funds saw net inflows of US$ 843 million. This was largely attributable to an increase 

in money market fund assets. In 2011, fund assets declined by 8% year-on-year. 

These funds saw net outflows of US$ 784 million. This was largely attributable to a 

decrease in money market fund assets. 





8,479 9,286 Money Market 9.5% 793 

329 384 Equity 16.5% 53 

223 223 Other - - 




Fund Assets Fund Type 

AuM% 

Change Net Flows 

2010 2011 

8,887 8,479 Money Market -4.6% (423) 

554 329 Equity -40.6% (218) 

366 223 Other -39.1% (138) 


245

Egypt 

Top 10 Egypt Domiciled Funds by Assets 



Beltone Banque Misr Money Market 

1 EGP 

Money Market Beltone Fund Mgmt 2,799 



4 EFG National SocGen Bank Themar Money Market National Societe 969 

5 HSBC Egypt Bank MM - Kol Youm Money Market Beltone Fund Mgmt 566 


6 USD 

Money Market Beltone Fund Mgmt 564 

7 EFG Bank of Alexandria II Cum. Ret Money Market Bank of Alexandria 367 

8 Beltone Banque du Caire II Money Market Beltone Fund Mgmt. 269 

9 Beltone Banque Misr MM Euro Money Market Beltone Fund Mgmt. 230 

AAIB Arab African Money Market - 

Arab African Inv. 

Money Market 

10 Juman 

Mgmt 

220 


Equity Funds 

In 2012H1, Egypt domiciled equity fund assets under management increased by 

17%. Equity funds witnessed net inflows of US$ 53 million. In 2011, locally domiciled 

equity fund assets under management declined by 41%. Equity funds witnessed net 

outflows of US$ 218 million. 

Top 10 Egypt Equity Funds by Assets 



1 AAIB Arab African Int. Bank Shield Equity Arab African Inv. 45 

2 

EFG Faisal Islamic Egyptian Bank 

Periodic Return 

Equity Faisal Islamic Bank 25 

3 CIB II Equity (Istethmar) Equity Commercial Intl AM 23 

4 HC Banque Misr IV Shari'ah Equity Banque Misr SAE 19 

5 EFG Banque du Caire I (Cum.) Equity Banque du Caire 19 

6 

EFG Bank of Alexandria I Regular Rtn & 

Cap Growth 

Equity Hermes Fund Mgmt 16 

7 HC Banque Misr III Growth & Inc. Equity Banque Misr SAE 13 

8 Banque Misr II - Capital Growth Equity Banque Misr SAE 13 

9 Prime Sanabel Equity Equity Societe Arabe 12 

10 EFG Baraka Bank Egypt Equity ESFB EJSC 12 


246

Egypt 


In 2012H1, money market fund assets increased by 9.5% from US $ 8.48 billion at 

end-2011 to US$ 9.29 billion. Estimated net inflows to money market funds stood at 

US$ 793 million. In 2011, money market fund assets decreased by 4.6% from US $ 

8.9 billion at end-2010 to US$ 8.48 billion. Estimated net outflows from money market 

funds stood at US$ 423 million. 

Top Egypt Money Market Funds by Assets 



1 


EGP 

Money Market 

Beltone Fund 


2,799 



EFG National Societe Generale 

4 

Bank Themar 

Money Market National Societe 969 

5 HSBC Egypt Bank MM - Kol Youm Money Market Beltone Fund Mgmt 566 

6 Beltone Banque Misr USD Money Market Beltone Fund Mgmt 564 

EFG Bank of Alexandria II 

7 

Cumulative Return 

Money Market Bank of Alexandria 367 

8 Beltone Banque du Caire II Money Market Beltone Fund Mgmt 269 

9 Beltone Banque Misr Euro Money Market Beltone Fund Mgmt 230 

AAIB Arab African Money Market - 

10 

Juman 

Money Market Arab African Invest 220 


247

Egypt - Directory 

Oman 

Nr Company Phone Internet E-mail Address 

1 ABC Bank Egypt 00202- 2736 2684 - 

2736 3579 

2 Al Baraka Bank 

Egypt 

3 Al Watany Bank 

Egypt 

4 Amwal Financial 

Investment 

5 Arab African 

International Bank 

6 Arab Misr Insurance 

Group 

00202- 27481222- 

27481777 

www.arabbanking. 

com.eg 

www.albarakabank.com.eg 

abcegypt@arabbanking 

.com.eg 

central@albaraka.com. 

eg 

00202- 333 888 16/7 www.alwatany.net service.quality@alwata 

ny.net 

0020- 3305 4173/4 www.amwalam.co 

m 

1, El Saleh Ayoub St., Zamalek, 

Cairo 

60 Mohi El-Deen Abou El-Ezz, 

Dokki, Giza 

cs@amwalam.com 30 Gameat El Dowal El Arabia St. , 

14th Floor , El Mohandeseen , Giza, 

Egypt 

0020 2-2792-2881 www.aaib.com inquiry@aaib.com Arab African International Bank 

Building, 5 Midan El Saray El 

Koubra Street, Garden City Area 60, 

Egypt, Cairo , 11516 

0020 2-2451-7620 www.amig.com.eg mail@amig.com.eg AMIG Building, 13 Al Maahad Al 

Ishtiraki Street, Merryland Area, 227, 

Cairo, Egypt 

49 Kasr El Nile st Cairo 

7 Bank of Alexandria 00202- 2399 2112 www.alexbank.co 

m 

customer_support@ale 

xbank.com 

8 Banque du Caire 00202 2264 6400 www.bdc.com Banque Du Caire Building 6 Dr 

Mustafa Bou Zahra Street, Nasr 

City, Egypt 

9 Banque Misr 00202-2391-215 www.banquemisr.c 

om 

10 Beltone Fund 


0020 2 3535 7700 www.beltonefinanc 

ial.com 

info@banquemisr.com Banque Misr Building, 151 

Mohammed Farid Street, 11511 

Cairo, Egypt 

assetmanagement@bel Nile City Towers, South Tour, 7th 

tonefinancial.com Floor Corniche El-Nil 2005 A, Cairo 

11221, Egypt 

248


Oman 

11 Commercial 

International AM 

12 Credit Agricole 

Egypt 

13 Delta Rasmala 


00202- 376 256 54 www.cich.com.eg funds@cicapital.com.eg 64 Mohie El Din Abou El-Ezz St., 

Dokki, Giza, Egypt 

00202- 376 256 54 www.ca-egypt.com 4, Hassan Sabry St., Zamalek, 

Cairo, P.O. Box: 1825, Postal Code: 

11511 

00202 353 70 575 www.rasmala.com egypt@rasmala.com Building No. B129, Phase 3, Smart 

Village,, Km 28 Cairo Alexandria 

Desert Road, 6 October 12577 | 

Egypt 

14 Egyptian Gulf Bank 00202- 333 683 59 www.egbbank.com 

.eg 

15 El Ahly Fund 


16 El Rashad Asset 


17 Export 

Development Bank 

00202 37 612 449 www.elahlyfm.com dr.essam@elahlyfm.co 

m 

0020 2-3336-0275 www.elrashad.com elrashad@elrashad.co 

m 

www.edbebank.co 

m 

18 Faisal Islamic Bank 00202- 279 43 433 www.faisalbank.co 

m.eg 

19 HC Securities and 

Investment 

20 Hermes Fund 


info@edbebank.com Not available 

cairo@faisalbank.com.e 

g 

El Orman Plaza Building 8 , 10 

Ahmed Nessim St., Giza. P.O. Box : 

56 El-Orman 

15 El Mesaha St. Dokki ,Giza , 

Egypt 

Giza El Fotouh Tower 56, Gammat 

El Dewal El Arabia Street, 

Mohandessin Area, Egypt, 8th floor , 

Cairo 

3, 26th July St., Cairo Egypt, 

P.O.Box: 2446 - 283 Cairo 

0020 2-3535-5999 www.hc-si.com Building B224-F15, KM28 Cairo 

Alexandria Desert Road, Smart 

Village Area, 12 Egypt, 6th of 

October , 12577 

0020 2 3535 6499 www.efghermes.com 

amsales@efghermes.com 

Building No. B129, Phase 3, Smart 

Village,, Km 28 Cairo Alexandria 

Desert Road,, 6 October 12577 , 

Egypt 

249


Oman 

21 Housing & 


22 Misr Iran 



Egypt 

24 National Societe 

General Banque 

25 NBK Capital Asset 

Management Egypt 

26 Pharos Asset 

Management Egypt 

002 2-3749-9707 www.hdb-egy.com hdbank@hdb-egy.com Building 12, 6th-8th Floor,Syria 

Street, Giza, Al Muhandiseen Area, 

234, Egypt 

00202- 357 27 311 www.midb.com.eg midb@midb.com.eg he Nile Tower - 21 Charles Degaulle 

Ave. (Ex. Giza St.)Giza P.O. Box : 

219 Orman-Giza Postal Code: 

12612 Giza, Egypt 

0020 2-2594-5000 www.nbe.com.eg nbe@nbe.com.eg National Bank of Egypt Tower, 1187 

Corniche Al Nile Street, 11611 Cairo 

,Egypt 

0020 2-2770-7000 www.nsgb.com.eg info@nsgb.com.eg Dar Champollion Building, 

Champollion Street, Down Town 

Area, 2664 Egypt, Cairo 11111 

00202 2794 2563 www.nbkcapital.co 

m 

0020 2-2737-3483 www.pharosholdin 

g.com 

27 Piraeus Bank Egypt 0020 25 76 4644 www.piraeusbank. 

com.eg 

28 Prime Management 

Services 

29 Societe Arab Intle 

de Bank 

00202- 3300 5700 www.primegroup.o 

rg 

am.ia@nbkcapital.com 20th Aishaa El taymoria, Garden 

City, Cairo., Postal Code: 11451 

info@pharosholding.co 

m 

Building 4 A, Abu Aboalseta Street, 

Zamalek Area, 11211 Egypt 

Km28, Cairo, Alex Desert Rd, 6th 

October, Bldg. No. B227-B228, 

Smart Village 12577, Egypt 

2 Wadi El Nil St., Liberty Tower, 

Mohandeseen, Giza 

0020 2-3332-5106 Building 56, Jameat Al Dowal Al 

Arabia Street, Al Muhandisin Area 

54 , 124 Egypt 

30 Suez Canal Bank 00202- 27943433 www.scbank.com. 

eg 

info@scbank.com.eg 7 Abd El-Kader Hamza st. Garden 

City 

250

Kuwait

Kuwait 


In 2012, real GDP growth is forecast to have decelerated to 6% year-on-year, down 

from an estimated 8.2% in 2011. Higher oil prices and output continued to bolster the 

country’s current account and budget balances estimated at 44.5% and 30.2% of GDP, 

respectively. Growth in pace of non-oil activity is estimated to have picked up to over 5% 

in 2012 despite cabinet changes and concerns about the pace of the development plan’s 

implementation. Kuwait has consistently run large surpluses in recent years giving the 

government the space to launch a four year development plan estimated to amount 

to US$ 55 billion in early 2010. The plan which will be key to the pace of non-oil sector 

growth envisages private sector involvement through private-public partnerships and 

build-operate-transfer projects and targets total spending including private sector to 

reach US$ 100 billion for the project. It focuses on investment in health, education, and 

infrastructure and has the objective of transforming Kuwait into a regional trade and 

financial center. 

In 2013, real GDP growth is forecast to slow to 3.9% as oil output is not expected to rise 

at the pace that it has in the past two years. 

Industry Overview 1 

There are 22 banks (11 local - of which 6 are Islamic banks -, 10 branches of foreign 

banks, and one specialised bank) and 93 investment companies (down from 100 in June 

2010 and 95 in 2011). Out of the total number of investment companies, 50 are sharia 

compliant. According to the IMF, “investment sector assets were the equivalent of 64% 

of 2011 GDP. Assets under management by these fell 15% in 2011 driven by markets 

and redemptions. Investment companies continue to face a difficult environment. 15 

listed investment companies have not published financial statements in recent quarters, 

or have been suspended or delisted from the Kuwait Stock Exchange”. 

1 A detailed survey of the investor profile in Kuwait is provided in “Mutual Funds in 

Kuwait: Market Survey of Current Investors and Potential investors of Mutual Funds in 

Kuwait”, Institute of Banking Studies, 2007. 

253

Kuwait 

Based on information provided on CBK’s website, there were 47 entities with 111 

locally established funds as of September 2011 in Kuwait (112 in June 2010), of 

which 54 were sharia compliant funds (55 in June 2010). 

Central Bank previously provided mutual fund data in its annual economic report, but this 

appears to be discontinued. Central Bank also provides fund data in its statistical 

bulletins, but these differed significantly from those in the economic report in the past. 

Latest available data for end-June 2012 show that total fund assets stood at US$ 

13.2 billion (-14.2% year-on-year and -5.9% from end-2011). Domestic fund assets 

stood at US$ 5.41 billion (-16.9% year-on-year), down from US$ 5.8 billion at the end 

of 2011 (-6.7%). Foreign fund assets stood at US$ 7.78 billion (-12.3% year-onyear). 

Sharia compliant domestic fund assets stood at US$ 675 million (-17.8% year-onyear) 

accounting for 12.5% of domestic fund assets (steady since 2008). Sharia 

compliant foreign fund assets stood at US$ 66 million (-39% year-on-year) accounting for 

0.85% of foreign fund assets (down from 6.7% in 2005). 

Number and Assets of Domestic and Foreign Funds* 

(billions of U.S. dollars where relevant) 


Locally Incorporated Foreign 


Total 

Sharia Conventional 

Domestic Foreign 

Funds Funds 


2000 - - - 0.4 - - 

2001 - - - 1.9 - - 

2002 - - - 3.4 - - 

2003 - - 68 5.7 2.2 7.9 

2004 20 40 72 7.9 3.2 11.1 

2005 24 42 - 9.8 - - 

2006 33 44 89 9.8 5.8 15.7 

2007 47 52 102 14.4 8.6 23 

2008 54 57 120 10.8 10.2 18.2 

2009 54 58 117 7.0 8.6 15.6 

2010 - - - 7.3 9.1 16.4 

2011 54 57 - 5.8 8.2 14.0 

12Q2 - - - 5.4 7.8 13.2 

Source: Central Bank of Kuwait, International Monetary Fund *Data for 2000-2009 

based on CBK Economic Bulletin; data differ significantly from those provided in 

quarterly/monthly bulletins. Data since 2009 from quarterly bulletins. 

254

Kuwait 

Fund Operators, Breakdown by Fund Type 

(Number of Funds as of June 2012) 

Company Conventional Sharia Equity Bond 

Money 

Market Other 

A'ayan Capital Investment 1 1 2 

Ahli Capital Investment 2 2 

Al Ahlia Investment Co. 1 1 2 

Al Aman Investment 1 1 

Al Dar Asset Management 5 4 1 

Al Dhow Investment 1 1 

Al Fouz Investment 1 1 

Al Imtiaz Investment 3 1 2 

Al Madar Finance and Inv 2 1 1 

Al Madina For Fin & Inv 2 2 

Al Muthana Investment 2 2 

Al Safat Investment Co. 1 1 

Amar Finance & Leasing 1 1 

Bayan Investment Co 2 1 1 

Boubyan Bank 3 1 2 

Burgan Bank 2 1 1 

CapCorp Investment Co 1 1 

CBK Capital 5 1 4 2 1 

Coast Invest & Dev. Co 2 1 1 

First Investment Company 3 2 1 

Global Investment House 21 4 15 2 5 3 

Gulf Investment Corp 3 1 2 2 

Gulfinvest International 1 1 

Housing Finance Co. 1 1 

Industrial and Fin & Inv. 1 1 

International Financial Adv 2 1 2 1 

KIPCO Asset Management 6 1 2 1 1 3 

KMEFIC 5 3 2 

Kuwait Fin & Inv. Co 1 1 2 

Kuwait Financial Centre 7 3 7 1 1 1 

Kuwait Investment Co. 5 3 4 1 1 2 

Kuwait Real Estate Inv. Co 1 1 

Manafae Investment Co. 1 1 

Muthanna Investment Co. 2 2 

National Investments Co. 3 5 6 1 1 

Noor Financial Investment 2 3 4 1 

Osoul Investment Co. 1 1 

Securities Group Co. 1 1 2 

Securities House 1 1 1 1 

Tamdeen Real Estate Co. 1 1 

Tharwa Investment Co. 2 1 2 1 

Wafra International Inv. Co 2 2 2 2 

Watani Investment Co. 7 4 1 2 

Zumorroda Investment Co. 1 1 

Source: Lipper, a Thomson Reuters Company *Aayan Investment has 3 funds 

according to its website **NBK Capital (Watani Investment Company) had 41 funds as of 

September 2011 (10 managed in-house and 31 with third parties). 

255

Kuwait 

Fund Assets by Operator and Type – Selected Data for Kuwait Domiciled Funds 


Money 

Company Conventional Sharia Equity Bond Market Other 

A'ayan Capital Investment 

Ahli Capital Investment Co 191.4 191.4 

Al Ahlia Investment Co. 

Al Aman Investment Co 14.2 14.2 

Al Dar Asset Management 276.6 46.1 230.5 

Al Dhow Investment Co 

Al Fouz Investment Co 

Al Imtiaz Investment Co 78.1 78.1 

Al Madar Fin & Inv Co 13.6 13.6 

Al Madina For Fin. Inv Co 

Al Muthana Investment Co 40.3 40.3 

Al Safat Investment Co. 18.4 18.4 

Amar Fin & Leasing Co 

Bayan Investment Co. 15.3 7.7 7.6 

Boubyan Bank 

Burgan Bank 324.9 276.2 48.7 

CapCorp Investment Co. 32.4 32.4 

CBK Capital 145.2 4.6 149.8 

Coast Inv and Dev Co 14.7 14.7 

First Investment Company 9.1 9.1 

Global Investment House 603.5 146 689.4 27.5 21.1 11.5 

Gulf Investment Co. 265.6 9.9 105.3 170.2 

Gulfinvest International 

Housing Finance Co. 35.4 35.4 

Industrial and Fin. Inv Co 36.6 36.6 

International Fin Adv 6.3 6.3 

KIPCO Asset Man Co 176.1 91.7 84.4 

KMEFIC 128.9 128.9 

Kuwait Finance and Inv Co 6.5 58.3 64.7 

Kuwait Financial Centre 693.7 275.4 732.9 15.4 220.8 

Kuwait Investment Co 704.2 3.4 554.2 150.0 3.4 

Kuwait Real Estate Inv 

Manafae Investment Co 13.3 13.3 

Muthanna Investment Co 41.3 41.3 

National Investments Co 479.3 375.8 855.2 

Noor Financial Inv Co 59.2 59.2 

Osoul Investment Co 

Securities Group Co 

Securities House 

Tamdeen Real Estate Co 

Tharwa Investment Co 34.4 11.3 45.7 

Wafra International Inv. Co 177.0 89.5 212.6 53.9 

Watani Investment Co 96.8 96.8 

Zumorroda Investment Co 16.3 16.3 

Source: Lipper, a Thomson Reuters Company (Data only provided where available; 

data on real estate funds, in particular, are not readily available) 

256

Kuwait 

In 2012Q2, 86% of domestic fund assets comprised local assets. 

Breakdown of Fund Assets by Type 

(2012Q2) 

Other 

40.9% 

Summary Breakdown 

Bonds/Sukuk 

2.3% 

Cash 

9.0% 

Equity 

47.7% 

Source: Central Bank of Kuwait 

Local Other 

32.7% 

Detailed Breakdown 

Foreign Other 

8.2% 

Cash 

9.0% 

Foreign Bonds 

0.9% 

Local Bonds 

Foreign Shares 

1.4% 

4.9% 

Local Shares 

42.8% 

Fund Assets by Type 2005-2012Q2 

(millions of U.S. dollars, end of period) 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

Cash Equity Bonds/Sukuk Other 

2005 2006 2007 2008 2009 2010 2011 2012Q2 

Source: Central Bank of Kuwait 

257

Kuwait 

Trends by Fund Type (based on data for Kuwait domiciled funds) 

Overview 

In 2012H1, mutual funds in our dataset domiciled in Kuwait saw assets decline by 

9% due to a fall in money market and equity fund assets. There were net outflows 

of US$435 million from funds in our dataset. Estimates point a US$8 million net 

outflow from money market funds, while equity funds actually saw net outflows of US$ 

415 million. The decline in equity fund assets was, therefore driven by market 

performance. Money market funds registered a decline in return of -4%, while equity fund 

returns were -0.1% on average. 





327 307 Money Market -6% (7.7) 

260 287 Fixed Income 11% 27.4 

4,322 3,901 Equity -10% (414.8) 

448 406 Other -9% (38.6) 


Top 10 Kuwait Domiciled Mutual Funds by Assets 



1 Al Raed Fund Equity Kuwait Investment Company 515 


3 Markaz Investment&Dev. Fund Equity Kuwait Financial Centre 309 


5 Global 10 Large Cap. Index Index Global Investment House 258 

6 Al Dar Money Market Fund 

Money 

Market 

Al Dar Asset Management . 230 

7 Markaz Real Estate Fund Other Kuwait Financial Centre 221 


9 KIC Bond Fund 

Fixed 

Income 

Kuwait Investment Company 150 



258

Kuwait 

In 2011, assets of mutual funds in our dataset domiciled in Kuwait declined by 

22% from end-2010 primarily due to a decline in equity fund assets which was, in 

turn, due to market performance. Mutual fund assets experienced estimated net 

outflows of US$ 1.43 billion. Estimates point to a US$ 800 million net outflow from 

equity funds and US$ 440 million from money market funds. Money market funds 

registered a negative return of -2.3%, while equity fund returns were -1% on average. 




2010 2011 

785 327 Money Market -58% (439.8) 

385 260 Fixed Income -33% (120.8) 

5,162 4,322 Equity -16% (799.8) 

517 448 Other -13% (66.2) 


Equity Funds 

In 2012H1, Kuwait domiciled equity fund assets in the dataset fell by 10% and 

witnessed net outflows of US$ 415 million. Sector equity fund assets decreased by 

13.6%, while index fund assets fell by 4.3%. In 2011, Kuwait domiciled equity fund 

assets decreased by 16% and witnessed net outflows of US$ 800 million. Sector equity 

fund assets decreased by 3.5%, while index fund assets declined by 9.5%. 

Top 10 Kuwait Domiciled Equity Funds by Assets 



1 Al Raed Fund Equity Kuwait Investment Co. 515 


3 Markaz Investment and Dev. Fund Equity Kuwait Financial Centre 309 


5 Markaz Mumtaz Investment Fund Equity Kuwait Financial Centre 197 


7 Al Safwa Investment Fund Equity National Investments Co. 136 

8 Al Durra Islamic Fund Equity Global Investment House 133 

9 Al Ahli Kuwaiti Fund Equity Ahli Capital Investment 132 

10 Markaz Forsa Financial Fund Equity Kuwait Financial Centre 132 


259

Kuwait 


In 2012H1, Kuwait domiciled fixed income fund assets increased by 11%. There were 

net inflows of US$ 27.4 million. In 2011, fund assets decreased by 33% and saw net 

outflows of US$ 121 million. 

Top Kuwait Domiciled Fixed Income Funds by Assets 



1 KIC Bond Fund Fixed Income Kuwait Investment Company 150 

2 

Bond and High Yield 

KIPCO Asset Management 

Fixed Income 

Fund 

Co. 

84 

3 Global Bond Fund Fixed Income Global Investment House 27 

4 

Markaz Fixed 

Income Fund 

Fixed Income Kuwait Financial Centre 15 

5 GIC KD Bond Fund Fixed Income Gulf Investment Corporation 10 



In 2012H1, Kuwait domiciled money market fund assets fell by 6%. These witnessed net 

outflows of US$ 8 million. In 2011, Kuwait domiciled money market fund assets fell by 

58%. These witnessed net outflows of US$ 440 million. 

Top Kuwait Domiciled Money Market Funds by Assets 



1 Al Dar Money Market Fund Money Market Al Dar Asset Management 230 

2 Burgan Financial Fund Trade Finance Burgan Bank 49 

3 Global KD Money Market Money Market Global Investment House 10 

4 Al Muthanna Fund Money Market First Investment Company 9 

5 Global Islamic Fund Money Market Global Investment House 5 


260

Kuwait - Directory 

Oman 

Company Phone Internet E-mail Address 

A'ayan Leasing & 

Investment 

Company 

Al Ahli Bank of 

Kuwait 

Al Dar Asset 


Company 

Al Imtiaz Investment 

Company 

Al Madar Finance 

and Investment 

Company 

00965 180-4488 www.aayan.com info@aayan.com Al Sour Tower, 13th Floor, Al 

Sour Street, Al Sharq Area, 

P.O. Box 1426, Kuwait City 

Safat 13015, Al Assimah, 

Kuwait 

00965 2240-0900 www.eahli.com headoffice@abkuwait.com Al Ahli Bank of Kuwait Building, 

Ahmad Al Jaber Street, Safat 

Square, P.O. Box 1387, Kuwait 

City Safat 13014, Al 

Assimah,Kuwait 

00965 2299-7900 www.adamco.com adam-asset@adamco.com Arraya Center, 30th Floor, Al 

Shuhada Street, Al Sharq Area, 



Kuwait 

00965 182-2282 www.alimtiaz.com info@alimtiaz.com.kw Al Dhow Tower, 2nd-6th, 9th 

and 30th-32nd Floor, Khaled 

Bin Al Waleed Street, Al Sharq 

Area, P.O. Box 29050, Kuwait 

City Safat 13151, Al Assimah, 

Kuwait 

00965 2232-4200 www.almadar-fi.com info@almadar-fi.com Al Salam Tower, 14th Floor, 

Fahad Al Salem Street, 

Salhiyah Area, P.O. Box 1376, 

Kuwait City Safat 13014, Al 

Assimah, Kuwait 

261


Al Muthana 

Investment 

Company 

Al Safat Investment 

Company 

Al Tijari Investment 

Company 

Al-Aman Investment 

Company 

Al-Dhow Investment 

Company 

Al-Fouz Investment 

Company K.S.C. 

Oman 

00965 2298-7000 www.mic.com.kw info@mic.com.kw Baitek Tower, 32nd and 33rd 

Floor, Safat Square Street, 



Kuwait 

00965 2-187-7777 www.alsafatinvest.com info@alsafatinvest.com Al Safat Tower, 13th, 14th and 

15th floor, Beirut Street, 

Hawali, P.O. Box 20133, 


Assimah,Kuwait 

00965 2299-0599 www.cbkcapital.com info@cbkcapital.com Traders Mall, Block Number 5, 

Ground Floor, Ali Al Salem 

Street, Al Mubarakiah Area, 



Kuwait 

00965 182-2626 www.alaman.com.kw info@alaman.com.kw Al Dhow Towers, 11th-13th 

Floor, Khaled Bin Waleed 

Street, Sharq Area, P.O. Box 

12466, Kuwait City Shamiya 

71655, Al Assimah, Kuwait 

00965 2461-3241 www.aldhowinvestment 

.com 

info@aldhowinvestment.com Al Sayer Building II, 2nd Floor, 

Kuwait Free Trade Zone, P.O. 

Box 485, Kuwait City Safat 


00965 2226 0444 www.alfouz.com.kw info@alfouz.com.kw 1st - 29th Floor, Al Dhow 

Tower, Khalid Bin Waleed 

Street, Sharq, P.O.Box: 2212, 

Safat 13023, Kuwait 

262


Oman 

Al-Madina for 

Finance and 

Investment 

Amar Finance & 

Leasing Company 

Bank of Kuwait and 

the Middle East 

(Ahliunited) 

Bayan Investment 

Company 

00965 2296-0777 www.almadinainvest.co 

m 

info@almadinainvest.com Jasem Al Asfor Tower, 17th, 

18th and 19th Floor, Al Sour 

Street, Migrab Area, P.O. Box 

2799, Kuwait City Safat 13028, 

Al Assimah, Kuwait 

00965 182 6050 www.amarfinance.com admin@amarfinance.com Sharq Area, Ahmed Al-Jabber 

Str, Al - Bodoor Tower First 

Floor, 28776 Safat 13148 

Kuwait 

00965 22 312 099 www.ahliunited.com.kw Not available Corporate Banking Dept 

Location: 10th Floor, AUB 

Head Office, Banking Complex 

Building, Mubarak Al Kabeer 

St., Safat , Kuwait City, Kuwait 

,Postal Address : P.O.Box 71 

Safat , 12168 Kuwait 

00965 184-0000 www.bayaninvest.com info@bayaninvest.com Souad Complex Building 21, 

1st, 11th and 12th Floor, Fahad 

Al Salem Street, Area 12, P.O. 

Box 104, Kuwait City Al 

Dasmah 35151, Al Assimah, 

Kuwait 

Boubyan Bank 00965 2232-5000 www.bankboubyan.com info@bankboubyan.com Block Number 5, Building 

Number 15, Abdullah Al Salem 

Street, Central Commercial 



Kuwait 

263


Oman 

Burgan Bank 00965 2298-8000 www.burgan.com info@burgan.com Burgan Tower, 32nd Floor, 

Abdullah Al Ahmad Street, 

Sharq Area, P.O. Box 5389, 



Cap Corp 

Investment 

Company 

00965 2292-5300 www.capcorpkw.com capcorp@capcorp.com.kw Al Raya Tower Number 2, 26th 

and 27th Floor, Al Sharq Area, 



Kuwait 

Coast Investment 

and Development 

Company 

Commercial Bank of 

Kuwait 

First Investment 

Company 


House 

00965 2223-0510 www.coast.com.kw cidco@coast.com.kw Coast Building, Shuhada 

Street, Al Sharq Area, P.O. Box 

26755, Kuwait City Safat 


00965 2299-0000 www.cbk.com mail@cbk.com Commercial Bank of Kuwait 

Building, Mubarak Al Kabeer 

Street, Souk Area, P.O. Box 



00965 2243-5856 www.fic.com.kw info@fic.com.kw Souk Al Safat Building, 1st 

Floor, Abdullah Al Mubarak 

Street, Mirqab Area, P.O. Box 



00965 2295-1000 www.globalinv.net global@global.com.kw Global Tower, Al Shuhadaa 

Street, Sharq, P.O. Box 28807, 



264



Corporation 


International 

Housing Finance 

Company 

Industrial and 

Financial 

Investments 

Company 

International 

Financial Advisors 

KIPCO Asset 


Company 

Oman 

00965 2222-5000 www.gic.com.kw gic@gic.com.kw Gulf Investment Corporation 

Building, Jaber Al Mubarak 

Street, Al Sharq Area, P.O. Box 



00965 2225-5400 www.gulfinvest.com info@gulfinvest.com Al Dhow Tower, 21st and 22nd 

Floor, Khaled Bin Al Waleed 

Street, Al Sharq, P.O. Box 



00965 2226-1444 www.iskan.com.kw info@iskan.com.kw Balaasem Building 7, Ground - 

6th Floor, Ahmad Al Jaber 

Street, Sharq Area, P.O. Box 



00965 2242-9073 www.ific.net ific@ific.net Industrial Bank of Kuwait 

Building, 2nd and 8th Floor, Al 

Mubarak Al Kabir Street, Sharq 



Kuwait 

00965 2245-5363 www.ifakuwait.com info@ifakuwait.com Al Salhiya Commercial 

Complex Gate 1 Building, 5th 

Floor, P.O. Box 4694, Kuwait 


Kuwait 

00965 185-2626 www.kamconline.com info@kamconline.com Al Shaheed Tower, Khaled Bin 

Walid Street, Al Sharq Area, 



Kuwait 

265


Kuwait and Middle 

East Financial 

Investment 

Company 

Kuwait Finance and 

Investment 

Company 

Kuwait Finance 

House 


Centre 

Kuwait Investment 

Company 

Kuwait Real Estate 

Investment 

Consortium 

Oman 

00965 2225-5000 www.kmefic.com.kw info@kmefic.com.kw Burj Al Jassem Building, 9th - 

15th Floor, Al Soor Street, Al 

Mirqab Area, P.O. Box 819, 



00965 188-9000 www.kfic-kw.com kfic@kfic-kw.com Al Arabia Tower, 19th - 23th, 

26th and 30th Floor, Ahmad Al 

Jaber Street, Al Sharq Area, 

P.O. Box 21521, Kuwait 

00965 2244-5050 www.kfh.com corp@kfh.com Kuwait Finance House 

Building, Abdullah Al Mubarak 

Street, Murqab Area, P.O. Box 



00965 2224-8000 www.markaz.com info@markaz.com Al Duaij Building, Grand 

Mubarak Street, Al Qiblah 



Kuwait 

00965 1-888852 www.kic.com.kw info@kic.com.kw Souk Manakh Building, 5th 

Floor, Mubarak Al Kabir Street, 

Al Sharq Area, P.O. Box 1005, 



00965 2244-8260 www.kreic.com.kw kreic@kreic.com.kw Kuwait Real Estate Investment 

Consortium Tower, Ahmad Al 

Jaber Street, Sharq, P.O. Box 



266


Manafae Investment 

Company 


Kuwait 

National Investments 

Company 

Noor Financial 

Investment 

Osoul Investment 

Company 

Securities Group 

Company 

Oman 

00965 2247-5550 www.manafae.com info@manafae.com Al Shaheed Tower, 10th and 

11th Floors, Khaled Ibin Al 

Walled Street, Al Sharq, P.O. 

Box 3132, Kuwait City Safat 


00965 2242 2011 www.nbk.com Head Office , P. O. Box 95 

Safat, 

13001 Kuwait , Abdullah Al 

Ahmad Street, Sharq ,State of 

Kuwait 

00965 2226-6666 www.nic.com.kw nic@nic.com.kw Khalijiya Building, 20th Floor, Al 

Mutanabi Street, Al Sharq 



Kuwait 

00965 181-8080 www.noorinvestment.co 

m 

info@noorinvestment.com Noor Building, Intersection of 

Jahra Street and Airport Road, 

Shuwaikh Area, P.O. Box 3311, 



00965 182-0777 www.osoulnet.com osoul@osoulnet.com Al Raya Building,27th Floor, Al 

Shuhada Street, Al Sharq Area, 



Kuwait 

00965 229- 90299 www.sgkuwait.com info@sg.com.kw P.O.Box 26953, Safat, Kuwait 

13130, Securities Group 

Building , Ahmed Al-Jaber 

Street, Sharq , Kuwait 

267


Tamdeen Real 

Estate Company 

Tharwa Investment 

Company 

The Securities 

House Company 

Tijari Investmant 

Company "CBK 

Capital" 

Wafra International 

Investment 

Company 

Watani Investment 

Company 

Oman 

00965 188- 2233 www.tamdeen.com info@tamdeen.com P.O.Box 21816, Safat 13079, 

Kuwait 

00965 2224-3000 www.tharwa.com Not available Arraya Tower 2, 21st and 22nd 

Floor, Abdulaziz Hamad Al 

Saker Street, Al Sharq Area, 



Kuwait 

00965 2245252 www.sh.com.kw info@sh.com.kw P.O. Box 26972 Safat, 13130, 

Kuwait 

00965 229- 90684 www.cbkcapital.com asabah@cbkcapital.com Al-TIJARI INVESTMENT 

COMPANY, Al-Mubarakiah 

Area, Ali Al-Salem Street, Block 

5 , Traders Mall – Opposite 

Grand Mosque, P.O.Box: 4988 

Safat 13050 Kuwait 

00965 

22411273/4/5/6 

www.wafra-kuwait.com Not available Sharq – Wafra Real Estate 

building , Ahmed Al Jaber 

Street, P.O. Box 27635 Safat 

13137 Kuwait 

00965 2224-6901 www.nbkcapital.com info.request@nbkcapital.com Al Raya II Building, 38th Floor, 

Al Shuhada Street, Al Sharq 



Kuwait 

268

Morocco

Morocco 


Slowdown in 2012 

Morocco’s economy has been adversely affected by the slowdown in the Eurozone, 

high oil prices, and lower agricultural output. Real GDP growth is estimated at 3% in 

2012, down from 5% in 2011. Nominal GDP is estimated at US$ 97 billion in 2012, 

according to the IMF. 

Grappling with twin deficits 

The country is estimated to have registered a current account deficit in excess of 8% 

of GDP in 2012. IMF has advised a more flexible exchange rate regime against a 

background of the large external deficit and foreign currency reserves equivalent to 

about four months of imports. Morocco engaged in an IMF precautionary and liquidity 

line arrangement amounting to US$ 6.2 billion in August in 2012. 

The country has undertaken an adjustment plan including an increase in the price of 

subsidised goods. Morocco is expected to register a budget deficit equivalent to just 

over 6% of GDP. The fiscal consolidation aims to reduce the deficit to about 3% of GDP 

in the medium term. Public debt remains at a manageable level at 58% of GDP. 

In 2013, real GDP growth is forecast to pick up to about 5%. Forecasts point to a 

current account deficit of about US$ 6 billion (5% of GDP) and budget deficit equivalent 

to about 5% of GDP in 2013. 

Overview 

As of June 2012, there were 19 banks - 6 listed -, 36 finance companies, 6 offshore 

banks, 13 micro-credit institutions, and 12 other entities providing financial services in 

Morocco. 

271

Morocco 

Fund Trends 

According to Bank Al Maghrib 1 , “in 2011, net assets managed by Undertakings for 

Collective Investment in Transferable Securities (UCITS) grew by MAD 6.7 billion 2 or 3%, 

after expanding by 20.8% in 2010. This slowdown was primarily due to the decline of 4.3 

billion of the outstanding amount of medium- and long-term bond funds and of 3.5 billion 

of that of equity funds, which partially offset the increase of 12.1 billion in short-term net 

assets of bond UCITS and 3 billion in those of money market funds. 

The number of UCITS stood at 333, up 13. The increase is below the average of 30 

registered over the past five years. In terms of composition, the share of medium and 

long-term funds fell year-on-year from 53% to 49%, while the share of money market 

funds remained unchanged at 26%. The share of short term bond funds almost doubled 

to 10%. By holder, financial corporations dominate with a share at nearly 65%, while 

nonfinancial corporations and resident individuals accounted for 26% and 8%, 

respectively”. 

Undertakings for Collective Investment in Transferable Securities 

(billions of Moroccan Dirhams, end of period) 

Source: Bank Al Maghrib 

1 

2011 annual report 

2 End-period MD/US$ exchange rates were 8.5855 in 2011 and 8.45 in 2012. The 

average exchange rate was 8.078 in 2011 and 8.62 in 2012. 

272

Oman 


Higher oil output and price 

Data point to average crude oil output of about 913 thousand barrels per day in January- 

October 2012, up 3.1% year-on-year. Average oil price in the same period was US$ 

109.5 per barrel, up 7% year-on-year. 

External surplus at record high 

The country registered a record trade surplus of US$ 26.2 billion (+ 39.9% y-o-y) in 

2011. Value of exports rose to US$ 47 billion (+29% y-o-y) driven by a jump in value of 

oil and related exports to US$ 33.3 billion (+32% y-o-y). Foreign exchange inflows were 

US$ 50 billion (94% were exports), while outflows stood at US$ 39.7 billion driven by 

imports (42% of outflows), remittances, and a deficit in the services balance. The current 

account balance registered a record surplus of US$ 10.3 billion (14.2% of GDP) 

Forecasts point to current account surpluses of US$ 8.8 billion (11% of GDP) and US$ 

4.4 billion (5.5% of GDP) in 2012 and 2013, respectively. 

Fiscal policy is expansionary 

Fiscal policy was expansionary to deal with unemployment which is at the centre of 

government focus. Authorities announced 36,000 jobs were created in 2012 and there 

were plans to create 56,000 jobs in 2013 of which 20,000 would be in the government 

sector. High oil prices and record production allowed the country to record a budget 

surplus of US$ 2.6 billion (about 3% of GDP) despite record spending in absolute terms. 

Growth is brisk 

In 2012, official real GDP growth estimate was 8.3% year-on-year driven by 

government expenditures and was significantly higher than earlier projections. Output 

growth is expected to moderate in 2013 to about 3.4%. 

275

Oman 

Overview 

As of June 2012, there were 7 domestic banks, 10 foreign banks, and 2 specialized 

banks in Oman. In 2011, 2 new entities received licenses to operate as sharia compliant 

banks. A number of investment companies provide mutual funds. 

Fund Trends 

In 2012H1, assets under management in selected funds increased by 2%. Net 

inflows to these funds are estimated at circa US$ 7.2 million. In 2011, assets under 

management in these funds fell by 12%. Net outflows from these funds were estimated 

at circa US$ 60.3 million. 

Local Fund Industry Breakdown by Selected Sponsors* 

(as of June 2012) 

Fund 

Manager 

Sponsor 

Company 

# of Local 

Domicile 

Funds 

List of Funds 

1 2 3 


Muscat 


Muscat 

6 

Muscat Fund 

Benchmark: MSM 

30 

AuM:US$ 20.95mn 

Domicile: Oman 

Khairat India Fund 

Benchmark: S&P 

CNX Nifty Shariah 

Index 

Domicile: Mauritius 

Oman Fixed 

Income Fund** 


Money Market 

Fund 

Benchmark: 

OMIBOR 3 months 

AuM: US$9.65mn 


Oryx Fund 


GCC Composite 

Shariah 

AuM:US$17.02mn 


Bank Muscat GCC 

Dividend Yield 

Fund 

Benchmark: MSCI 

Kuwait Index 


S&P GCC Large 

Cap Index Fund 


GCC Large Cap 

AuM:US$25.4mn 

Domicile: Lux 

India Dynamic 

Fund 

Benchmark: 

Bombay Stock 

Exchange 100 

AuM:US$0.43mn 


MSCI Kuwait 

Fund 

Benchmark:KSE 

AuM:$0.63mn 

Domicile: 

Bahrain 

Bank Muscat 

India Fund 

Benchmark: 

MSCI Kuwait 

AuM:$3.95mn 

Domicile: 

Mauritius 

Investment 

Stabilization 

Benchmark:MS 

M 30 

AuM:$323.45mn 


India Growth 

Fund 

Benchmark: 

MSCI India 

AuM:US$3.8mn 

Domicile: 

Mauritius 

276

Oman 

Sponsor 

Company 

Vision 

Investment 

Services 

Company 

Gulf Baader 

Capital 

Markets 

Oman & 

Emirates 

Investment 

Holding 

Company 

Oman Arab 


Muscat 

Capital LLC 

Fund 

Manager 

# of Local 

Domicile 

Funds 

Vision 3 

1 

2 

1 

- 

List of Funds 

1 2 3 

India Equity Fund 

of Funds 

Benchmark: 

Bombay Stock 

Exchange 100 

AuM:US$2.05mn 


Vision Emerging 

GCC Fund 


GCC Composite 

Shariah 

AuM: US$ 22.1mn 


The First Mazoon 

Fund 


GCC Composite 

Shariah 

AuM: $10.89mn 


Majan Capital 

Fund 


30CR 

AuM: US$ 8.24 mn 


Oman Al Arabi 

Fund 


30CR 

AuM: $ 20.85mn 


Muscat Capital 

Oman Premier 

Fund 


30CR 


Domicile: S. Arabia 

Vision Emerging 

Oman Fund 


30CR 

AuM:US$16.59mn 


Vision Real 

Economy GCC 

Fund 

AuM: $26.72mn 


- - 

Al Amal Fund 


Index 

AuM:US$1.34mn 


- - 

- - 

- 

Source: Company websites *Table compiled on a best effort basis; likely to be 

incomplete ** closed end fund formed in May 2010. 

277

Oman - Directory 

Oman 


Bank Muscat 00968 24768046 www.bankmuscat.com General Management (and 

Ruwi Main Branch), P.O. 

Box 2010, Ruwi, MBD Area, 

Postal Code No. 112 Ruwi, 

The Sultanate of Oman 

Gulf Baader Capital 

Markets 

Oman & Emirates 

Investment Holding 

00968 24-790614 www.gbcmoman.net info@gbcmoman.net Gulf Baader Capital Markets 

Building, Ruwi Area, P.O. 

Box 974, Muscat PC 112, 

Oman 

00968 24 48 9458 www.omanemirates.c 

om 

Oman Arab Bank 00968 24-706265 www.omanarabbank.com 

The Financial 

Corporation 

Company 



info@omanemirates.com 

oabmkt@omantel.net.om Oman Arab Bank Building, 

Central Bank Street, 

Muttrah Business District, 

P.O. Box 2010,Muscat Ruwi 

112, Oman 

00968 24-816655 www.fincorp.org fincorp@fincorp.org Royal Tower, 6th Floor, 

CBD Area, P.O. Box 782, 

Muscat Ruwi 131, Oman 

00968 24726000 www.investvis.co.om vision@investvis.com Vision Investment Services 

Company Building, 4th 

Floor, Sultan Kaabour 

Street, Ruwi, Box 712, 131 

Muscat, Oman 

278

Qatar 


Hydrocarbon contribution to output growth levels off 

Qatar’s economy has grown by double digits in real terms each year since 2005. Growth 

is projected to decelerate to about 5% in the medium term because output growth 

in the hydrocarbon sector - which accounts for a significant proportion of the economy 

– is tapering off. There are, in turn, two drivers of the slowdown in the pace of 

hydrocarbon activity. First, a moratorium on further gas exploration at the North Field 

until 2015 – and potentially longer given the introduction of supply from elsewhere in the 

World - will mean flat gas sector contribution to output growth. Second, aging oil fields 

will mean a decline in crude oil output. The upshot is that in the medium term the main 

driver of growth will be the non-oil sector. 

Non-hydrocarbon activity still on boosters 

The country plans to invest US$ 130 billion (77% of 2012F GDP) in the nonhydrocarbon 

sector between 2012 and 2018 in preparation for the 2022 FIFA Soccer 

World Cup. One of the high profile projects is a rail network estimated to cost US$ 37 

billion. 

Diversification of economic base being pursued with ample resources 

In 2011, the country registered a trade surplus of US$ 87.4 billion driven by exports of 

US$ 114.3 billion. Income, service, transfer accounts registered deficits producing a 

current account surplus of US$ 58.8 billion (33.9% of GDP). Data suggest a small 

decline in crude oil output in 2012 compared to 2011. Current account surpluses of 

28.8% and 21.6% of GDP are forecast in 2012 and 2013. Budgetary expenditures 

have risen sharply in the last decade, growing on average by 22% p.a. since 2002/2003. 

The country registered a budget surplus of 3.1% of GDP in 2011/2012, up from 2.9% of 

GDP in 2010/2011. At the end of May, FY 2012/2013 plans were released. Spending on 

public sector wages was raised by +48%, while spending on projects was raised by +7%. 

Official expenditure target was US$ 48.9 billion, with a surplus of US$ 7.7 billion 

(government target 8% of GDP). 

281

Qatar 

The non-oil sector will act as the main engine of output growth in the medium 

term. General Secretariat for Development and Planning (GSDP) forecast real GDP 

growth rate at 6.2% in 2012 citing slower hydrocarbon sector growth than in previous 

years. GSDP forecasts output growth of 4.5% in 2013 pointing to an expected decline in 

output from maturing oil fields. 


There are 11 local banks (1 specialised, 7 traditional and 4 Islamic) and 7 foreign banks 

that are regulated by Qatar Central Bank (QCB). There are also 3 investment companies 

and 3 finance companies registered with QCB. There are 11 funds registered with Qatar 

Central Bank under the 2002 investment funds law 25. This figure excludes third party 

or foreign funds that may be marketed by financial institutions. Qatar Financial Centre is 

also the base for numerous financial institutions – a listing of which is provided in the 

directory at the end of the chapter. 

There has been a pick up in fund launches in recent months. The First Investor 

launched its first equity fund which is open to Qatari nationals - The First Investor GCC 

Equity Opportunities Fund (Q) – and raised US$ 24.7 million in October 2012. The First 

Investor – a Barwa bank subsidiary – is seeking approval for the following funds 

according to its website: Qatar equity, emerging markets equity, international equity, real 

estate equity, commodity-related equity, insurance funds. In December, Qatar National 

Bank announced the launch of the country’s first fixed income fund. QNB Debt Fund will 

invest in debt securities issued by GCC based sovereign and corporate entities. Al 

Rayan Investment’s website indicates plans for a range of funds including sharia 

compliant real estate funds with a focus on Qatar, GCC, Asia. Meanwhile, Qatar 

Exchange officials have indicated that they are working with a firm which may sponsor a 

sharia compliant exchange traded fund. 

282

Qatar 

Fund Industry Breakdown by Selected Sponsors* 

(2012) 

Sponsor 

Company 

Qatar National 



of Qatar 

Masraf Al Rayan 

Amwal 

Qatar Islamic 


Epicure Managers 

Qatar Ltd 

Investment House 

Barwa Bank 

Fund 

Manager 

QNB 

Banque 

Privée 

(Suisse) SA 

EFG- 

Hermes 

Al Rayan 

Investment 

Shuaa 

Capital PSC 

QIB (UK) 

Global 

Investment 

House 

The First 

Investor 

Selected Funds 

1 2 3 

Al Watani II (non- 

Qataris) 

Benchmark: QSE index 

AuM: US$ 15 mn 

Domicile: Qatar 

AlWatani I (Qataris) 

Benchmark: QSE 

index 



Al Waseela – Q class 

(for Qataris) 

Benchmark: QSEI 



Al Rayan GCC (Q) 

Sharia compliant 



Qatar Gate, Q class 




EFH Global Sukuk 

Plus - Sharia 

AuM: US$ 213 mn 

Domicile: Lux 

Qatar Investment 

Fund -Index: QSE 

AuM: $ 227.8 mn 

Dom: Isle of Man 

Al Beit Al Mali (Q) 

Index: S&P Qatar 

Dom. Capped; Sharia 



GCC Equity 

Opportunities (Q) 



Al Waseela – F class 

(non-Qataris) 




Al Rayan GCC (F) 




Qatar Gate, N class 

(non-Qataris) 




EFH Islamic Financial 

Institution AuM: US$ 

28.4mn 

Domicile: Lux 

Debt Fund 

Domicile: 

Qatar 

- - 

- - 

- - 

Source: Company websites *Table is likely to be incomplete; CBQ has foreign 

funds by Kotak Mahindra, Man, Fidelity, BSI. Qatar Islamic Bank’s EFH Liquidity 

Fund which had US$ 13.5 million in assets is classified as inactive. 

- 

- 

- 

- 

283

Qatar 

Qatar Central Bank publishes data on investments under management in its banks’ 

monthly statement bulletin. The data also cover subsidiary entities. The data are 

classified by type of investments under management (portfolio management for 

customers, funds management, products held for customers, and others) and by 

currency (given as local and foreign currency). According to the data, assets categorised 

under fund management stood at US$ 2.8 billion at the end of July 2012. 

Banks – Investments under Management 



Period 

Funds 


Client Portfolios 

Investments 

Under Management 

2005 5.26 278 624 

2006 2.33 731 1,139 

2007 1,898 262 2,536 

2008 2,846 378 3,570 

2009 2,736 1,093 4,168 

2010 3,432 156 5,912 

2011 2,940 58 5,776 

July 2012 2,776 55 6,662 

Source: Qatar Central Bank 

284

Qatar 

Banks – Investments under Management 


8,000 

7,000 

6,000 

Funds 

All Other 

US$ million 

5,000 

4,000 

3,000 

2,000 

1,000 

- 

May-07 Dec-09 Jul-12 


Breakdown of Investments Under Management by Category 

November 2011 July 2012 

Portfolios 

2.6% 

Portfolios 

0.8% 

Other 

44.0% 

Funds 

49.3% 

Other 

54.1% 

Funds 

41.7% 

Products Held 

for Clients 

4.1% 

Products Held 

for Clients 

3.4% 


285

Qatar 

Breakdown of Investments Under Management By Currency 

November 2011 July 2012 

Foreign Currency 

5.0% 

Foreign Currency 

4.2% 

Local Currency 

95.0% 

Local Currency 

95.8% 


Banks – Funds Management by Currency 


End of Local Currency Foreign Currency Total Assets 

Period Assets Assets of Funds 

2005 - 5.26 5.26 

2006 - 2.33 2.33 

2007 1,898 0.65 1,898 

2008 2,846 0.36 2,846 

2009 2,735 0.32 2,736 

2010 3,432 - 3,432 

2011 2,940 - 2,940 

July 2012 2,776 - 2,776 


286

Qatar 

Banks – Growth of Fund Assets 


US$ million 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

Total AuM 

Growth 

250 

200 

150 

100 

50 

0 


- 

Feb-05 Jan-07 Dec-08 Nov-10 Oct-12 

-50 


Banks – Fund Assets 

(millions of U.S. dollars, end of period, annual data except for July 2012) 

3,500 

3,000 

US$ million 

2,500 

2,000 

1,500 

1,000 

500 

- 

2005 2006 2007 2008 2009 2010 2011 Jul-12 


287

Qatar 

Focus: Recent developments in Qatar’s financial 

services industry have further enhanced Qatar’s 

standing as a leading regional financial centre 

Yousuf Al Jaida - Director of Strategic Development - 

Asset Management QFCA 

Recent months have seen a number of positive developments in Qatar’s financial 

services industry, developments which demonstrate increased local, regional and 

international understanding of Qatar as an attractive place to do business and which will 

further underpin the continued growth of Doha as a leading regional financial centre. 

A range of measures have been undertaken to further deepen and broaden Qatar’s 

capital markets. Bonds issued by the State of Qatar have helped to form a sovereign 

debt yield curve. A Treasury bill programme has been started. The Qatar Exchange has 

announced initiatives to increase liquidity and price discovery. Among the initiatives are 

the listing of T-bills, a proposal to allow stock lending and borrowing, listing of ETFs and 

REITs, work to introduce market making, adding to the number of custodians and 

adjusting settlement rules to encourage trading. The Exchange has also launched the 

QE Venture Market for small- and medium-size enterprises. 

In March this year His Excellency Abdulla Bin Saoud al-Thani, the Governor of the 

Central Bank of Qatar, announced that a new regulatory body will be set up to form 

an integrated regulator to oversee all financial sector regulation in the country. 

More specialist activities are also being looked at. The QFC has recently issued new 

regulations creating robust and expanded regimes for special purpose vehicles and 

single family offices to operate out of the QFC. This is an important development and a 

major new opportunity for Qatar’s financial services sector. The intention is to create the 

environment in which Qatari businesses can access world class products and services 

without needing to look outside Qatar. For instance, it will be possible to form a Special 

288

Qatar 

Purpose Vehicle for a Sukuk issue or a family will be able manage its affairs effectively in 

Qatar rather than needing to find a solution outside the country. 

Evidence that the attractiveness of Qatar’s asset management platform is 

increasingly being recognised and that the QFC Authority’s strategy is bearing fruit 

came in April 2012 when the Qatar Asset Management Company, a collaboration 

between the QFC Authority and the Qatar Investment Authority, agreed to co-invest 

US$250 million with Barclays Natural Resource Investments (BNRI), a subsidiary of 

Barclays plc. BNRI is managing its portfolio from the QFC and members of the BNRI 

team are working in Doha. 

More recently, the creation of Aventicum Capital, the asset management joint venture 

between Credit Suisse and Qatar Holding, is another milestone that illustrates the 

opportunities prevalent in the region. It will have one division based in Doha which will be 

licensed by the Qatar Financial Centre and focus on investment strategies in the Middle 

East, Turkey and other frontier markets. The other division, which will concentrate on 

international business, will be based outside the region. Both, however, will serve clients 

worldwide. 

Meanwhile, QInvest, a QFC licensed firm, has acquired EFG Hermes, the Cairo-based 

regional investment bank, to create the leading investment bank in the Arab world. 

QInvest expects to further expand its asset its asset management business out of Qatar. 

It is pleasing to see that Qatar’s drive to ensure transparency in its regulatory, tax and 

legal environment and its success in becoming a place to do business is attracting 

increasing international recognition. The World Economic Forum Global Competitiveness 

Report 2012-2013 ranked Qatar as the world’s 11th most business-friendly country, the 

highest ranking in the Middle and up three places from the year before. The latest Global 

Financial Centres Index indicates that Qatar has risen by three places in the rankings. 

The Qatar Financial Centre continues to welcome a broad range of financial sector 

firms to the extent that the QFC Authority has now licensed nearly 170 firms since its 

inception. During the last 12 months we have seen a sharp rise in interest from firms 

from all over the world, including from Qatari ones, which see the value of the Qatar 

Financial Centre as a platform from which to conduct their regional and international 

289

Qatar 

business. In 2012, over 60% of new firms licensed in the Qatar Financial Centre have 

been local domestic firms. 

It has been a busy and successful period for Qatar’s financial services industry but the 

strong indications are that the conditions are in place to ensure that we will be even 

busier in the months and years to come. 

Fund Trends 

In 2012H1, assets under management in selected funds (including those domiciled 

abroad) sponsored by entities based in Qatar increased by 0.1%. Net outflows from 

these funds are estimated at circa US$ 6 million. In 2011, assets under management 

in these funds rose by 11.5%. Net inflows to these funds are estimated at circa US$ 

59.3 million. In 2012H1, assets under management in selected locally domiciled funds 

fell by 2.4%. Net outflows from these funds are estimated at circa US$ 4.4 million. In 

2011, assets under management in these funds fell by 9.9%. Net outflows from these 

funds are estimated at circa US$ 17.4 million. 

Mutual Funds of Selected Sponsors by Assets 


Rank 

Fund Name Type Fund Manager AuM 

1 Qatar Investment Fund Equity Epicure Managers Qatar 227.8 

2 EFH Global Sukuk Plus Fixed Income Qatar Islamic Bank UK 213.0 

3 Al Rayan GCC Q class Equity Al Rayan Investment 44.4 

EFH Islamic Financial 

4 

Institutions 

Equity Qatar Islamic Bank UK 28.4 

5 Watani 1 Equity QNB Bank Privee 22.3 

6 Al Waseela Q class Equity EFG-Hermes 19.5 

7 Al Beit Al Mali Equity Global Investment House 16.6 

8 Watani 2 Equity QNB Bank Privee 15.0 

9 Al Waseela F class Equity EFG-Hermes 14.4 

10 Al Rayan GCC F class Equity Al Rayan Investment 10.8 

11 Qatar Gate Q class Equity Amwal 9.4 

12 Qatar Gate N class Equity Amwal 4.9 

Source: Websites, Lipper Rankings, Lipper, a Thomson Reuters company 

290

Qatar 

Selected Regulated Firms at Qatar Financial Centre 

Count QFC # Firm Name Licensed Permitted Activities Status 

1 1 

2 3 

3 5 

4 7 

5 8 

6 9 

7 10 

8 11 

Ansbacher & Co 

Limited 

Arab Jordan 


(Qatar) LLC 

Credit Suisse 

(Qatar) LLC 

United Gulf 

Financial Services 

Company LLC 

AXA Investment 

Managers LLC 


Centre S.A.K. 

Standard 

Chartered Bank 


House (Qatar) LLC 

29/09/2005 Regulated Activities & 

Professional Services 

License 

Withdrawn 

06/09/2009 

5/12/2005 Regulated Activities Licensed 


21/03/2006 Regulated Activities License 

Withdrawn 

18/10/2009 



Withdrawn 

19/08/2010 


Withdrawn 

01/04/2008 


Withdrawn 

24/01/2011 


9 12 

QREIC Sukuk 

LLC 

10 16 

Lalive in Qatar LLP 31/08/2006 Professional Services Licensed - 

(Legal) 

Inactive 

11 18 Barclays Bank PLC 10/9/2006 Regulated Activities Licensed 

Morgan Stanley & 12/9/2006 Regulated Activities Licensed 

12 19 Co International 

plc 

13 26 EMIRATES NBD PJSC 12/12/2006 Regulated Activities Licensed 

14 27 Bank Audi LLC 21/12/2006 Regulated Activities Licensed 

15 28 

Alpen Capital 21/12/2006 Regulated Activities Licensed 


16 32 Deutsche Bank AG 28/12/2006 Regulated Activities Licensed 

Doha (QFC) Branch 

17 40 Lehman Brothers 18/03/2007 Regulated Activities License 

International 

Withdrawn 

(Europe) 

05/01/2010 

18 41 ICICI Bank Limited 21/03/2007 Regulated Activities Licensed 

19 42 Qatar Capital 

Partners LLC 

29/03/2007 Regulated Activities Licence 

Withdrawn 

06/09/2009 

20 43 Citibank, N.A. 31/03/2007 Regulated Activities Licensed 

21 44 

Crédit Agricole 

Suisse (Qatar) LLC 

22 45 Al Rayan 

Investment LLC 

23 46 The Royal Bank of 

Scotland plc 

31/03/2007 Regulated Activities Licensed – 

Inactive 



291

Qatar 


24 48 QINVEST LLC 30/04/2007 Regulated Activities Licensed 

25 49 TAIB Bank Qatar 

LLC 


Withdrawn 

08/07/2010 

26 52 BMI BANK B.S.C(c) 28/06/2007 Regulated Activities Licensed 

27 53 Goldman Sachs 9/7/2007 Regulated Activities Licensed 

International 

28 63 Kaupthing Bank hf. 27/09/2007 Regulated Activities License 

Withdrawn 

19/08/2009 

29 65 ABN AMRO Bank 

N.V. 


Withdrawn 

30 66 Industrial and 


of China Limited 

31 69 EFG-Hermes Qatar 

LLC 

32 72 

Bank Sarasin-Alpen 

(Qatar) LLC 

Sumitomo Mitsui 

33 73 

Banking 

Corporation 

34 75 

Union National 


35 79 

BLOM Bank Qatar 

LLC 

36 81 

Samba Financial 

Group 

37 82 

Beltone Financial 

Qatar LLC 

07/09/2008 









38 84 Coutts & Co 19/06/2008 Regulated Activities Licensed 

39 87 UBS AG 23/07/2008 Regulated Activities Licensed 

State Street Middle 29/07/2008 Regulated Activities Licensed 

40 88 East North Africa 

LLC 

41 90 

RELIGARE CAPITAL 

MARKETS PLC 


Withdrawn 

42 91 

Qatar First 


LLC 

17/01/2011 


43 96 QNB Capital LLC 28/09/2008 Regulated Activities Licensed 

44 98 

First Gulf Bank - 24/11/2008 Regulated Activities Licensed 

QFC Branch 

Al Mal Bank LLC 3/12/2008 Regulated Activities Licensed - In 

45 100 

Liquidation 

06/06/2010 

46 103 

47 106 

The Bank of Tokyo- 

Mitsubishi UFJ, Ltd. 

Nomura 

International plc, 

Qatar Financial 



292

Qatar 


48 107 

Centre Branch 

QInvest Partners 

LLC 

49 113 

Guardian Wealth 


Qatar LLC 

50 122 Matrix ME 

Alignment Fund 

14/06/2009 Operation and 

administration of trusts 

and similar arrangements 

Licensed 



Management LLC 

51 126 QInvest Capital LP 23/12/2010 Operation and Licensed 



52 128 JPMorgan Chase 5/1/2011 Regulated Activities Licensed 

Bank, N.A.-Qatar 


Branch 

53 129 Concordia Capital 13/01/2011 Regulated Activities Licensed 

LLC 

54 135 Matrix GCC Real 23/03/2011 Operation and Licensed 

Estate Fund LLC 



55 137 State Bank of India 7/4/2011 Regulated Activities Licensed 

– QFC Branch 

56 143 Abu Dhabi Islamic 

Bank – Qatar 


Branch 

47 106 

Nomura 

International plc, 

Qatar Financial 

Centre Branch 

Source: Qatar Financial Centre Regulatory Authority 

31/07/2011 Regulated Activities Licensed - Not 

yet 

commenced 

regulated 

activities 


Registered Funds at Qatar Financial Centre 

Fund Name Type Status Operator Date Registered 

Qinvest Capital LP 

Matrix GCC Real Estate 

Fund LLC 

Private Placement 

Fund 

Private Placement 

Fund 

Source: Qatar Financial Centre Regulatory Authority 

Registered QINVEST LLC 23/12/2010 

Matrix ME 

Registered 

Alignment Fund 


23/03/2011 

LLC 

293

Qatar 

Investment Funds Licensed in the State of Qatar 

Serial Founder Fund Name Type of Investors 

1 Amwal Qatar Gate Category ”N” Non-Qatari 

2 Amwal Qatar Gate Category ”Q” Qatari 

3 Commercial Bank of Qatar Al Waseela Fund Category “F” Non-Qatari 

4 Commercial Bank of Qatar Al Waseela Fund Category“Q” Qatari 

5 National Bank of Qatar National Fund Qatari 

6 National Bank of Qatar National “2” Non-Qatari 

7 Investment House Financial House Fund Qatari 

8 Alrayan Bank Al Rayan GCC Fund (Q) Qatari 

9 Alrayan Bank Al Rayan GCC Fund (F) Non-Qatari 

10 National Bank of Qatar Debt Fund - 

11 Barwa bank 


The First Investor GCC Equity 

Opportunities Fund 

Qatari 

294

Qatar 

Directory of Banks in the State of Qatar 

No Name of Bank Tel No Fax No PO Box E-Mail 

1 Qatar National Bank 4440 7407 4481 6178 1000 webmaster@qatarbank.com 

2 Commercial Bank 4449 0000 4449 0070 3232 info@cbq.com.qa 

3 Doha Bank 4445 6600 4441 6631 3818 dohabank@qatar.net.qa 

4 Al Ahli Bank 4423 2222 4423 2323 2309 info@ahlibank.com.qa 

International Bank of 

5 

4447 8000 4447 3745 2001 enquiries@ibq.com.qa 

Qatar 

6 Qatar Islamic Bank 4440 9409 4441 2700 559 info@qib.com.qa 

Qatar International Islamic 

7 

4438 5631 4441 1981 664 qiibit@qatar.net.qa 


7 Qatar Development Bank 4459 6600 4435 5433 22789 contact@qdb.org.qa 

8 Arab Bank 4438 7777 4441 0774 5 

15 Mashreq Bank 

4408 3111 4408 3227 1250 customercaredoha@mashreq 

bank.com 

9 Standard Chartered Bank 4424 8484 4424 8111 29 hsbcqa@qatar.net.qa 

10 HSBC Bank ME 4438 2100 4441 6353 57 hsbc@qatar.net.qa 

11 United Bank 4425 4444 4441 8575 242 doha_branch@ublme.com 

13 Bank Saderat Iran 4441 4646 4443 0121 2256 enquiries@ibq.com.qa 

16 BNP Paribas 4453 7537 4453 7453 2636 qdb@qatar.net.qa 

14 Masraf Al Rayan 4423 5799 4423 5833 28888 info@alrayan.com 

17 Al Khaliji Bank 4494 0000 4494 0808 28000 info@alkhaliji.com 

18 Barwa Bank 4448 8888 4448 8889 27778 info@barwa.com.qa 


Directory of Finance Companies in Qatar 

Name of Bank Tell No Fax No P.O. Box Website E-Mail 

Qatar Finance 4499 6555 44499 6556 19376 www.qfh.com.qa info@qfh.com.qa 

House 

First Finance 4455 9999 4455 9955 7258 www.ffcqatar.com info@ffcqatar.com 

Al Jazeera 

Finance 

4468 4333 4458 1869 22310 www.aljazeera.com. 

qa 


295

Qatar 

Directory of Investment Companies in Qatar 

Name of Bank Tell No Fax No P.O. Box Website E-Mail 

Investment 

House 

4483 6660 448344469 22633 www.invhouse.com info@invhouse.co 

m 

Amwal 4452 7777 4411 7426 494 www.amwal.com.qa amwal@amwalqa 

.com 

The First 

Investor 

4459 6111 44596165 16034 www.tfi.com.qa Info@tfi.com.qa 


296

Qatar - Directory 

Oman 


Al Rayan Investment 

LLC 

00974 4425-3333 www.alrayan.ae info@alrayan.com Masraf Al Rayan Building, 3rd 

and 4th Floor, Grand Hamad 

Street, P.O. Box 28888, Doha 

, Qatar 

Amwal 00974 4452-7777 www.amwalqa.com amwal@amwalqa.com Amwal Tower, West Bay Area, 

P.O. Box 494, Doha , Qatar 

The First Investor 00445 96111 www.tfi.com.qa info@tfi.com.qa Barwa Bank Building,, 5TH 

Floor- Grand Hamad Street , 

P.O.BOX 16034,Doha- Qatar 

Qatar National Bank 00444 07407 www.qatarbank.com webmaster@qatarbank.c 

om 

Commercial Bank of Qatar 

00444 90000 www.cbq.com.qa info@cbq.com.qa Commercialbank Plaza, Head 

Office, 380 Al Markhiyah 

Street, 60 Al Dafna Area, PO 

Box 3232, Doha, State of 

Qatar 

Masraf Al Rayan 00442 35799 www.alrayan.com info@alrayan.com P.O. Box 28888, Doha, State 

of Qatar 

Qatar International 

Islamic Bank 

004438 5631 www.qiib.com.qa qiibit@qatar.net.qa International Islamic - Main 

Branch, Grand Hamad Street, 

Doha Qatar 

HSBC Middle East 004438 2100 www.hsbc.net.qa hsbc@qatar.net.qa 

297

Qatar - Directory 

Oman 

Investment House 00974 4420-0300 www.invhouse.com info@invhouse.com Tornado Tower, 35th Floor, 

West Bay - Kornish Street, Al 

Dafna Area, P.O. Box 22633, 

Doha , Qatar 

Qatar Islamic Bank 00974 4440-9409 www.qib.com.qa info@qib.com.qa Qatar Islamic Bank Building, 

Grand Hamad Street, P.O. Box 

559, Doha , Qatar 

298

Saudi Arabia 


High oil prices support fiscal expansion necessary for job creation 

Saudi Arabia’s economy grew by 6.8% in 2012, down from 8.5% in 2011. Growth in the 

last two years was at the fastest pace since 2003. Nominal GDP rose to US$ 727 billion 

on the back of higher oil prices, production -with the latter rising significantly to offset the 

decline in Libyan oil supply in 2011 and Iranian output in 2012 -, and government 

expenditures in response to regional turmoil. 

The trade balance registered a record surplus of US$ 268 billion (37% of GDP) in 2012. 

Record oil exports pushed total exports to US$ 396 billion (+9% y-o-y), outpacing the 8% 

jump in imports. The current account surplus jumped from US$ 67 billion (12.7% of GDP) 

in 2010 to US$ 178.5 billion (25% of GDP) in 2012. Central Bank FX reserves have risen 

sharply to US$ 643 billion (+21% y-o-y) at end-November 2012. 

High oil prices support fiscal expansion 

Fiscal policy remains expansionary in response to regional unrest. Non-oil balance is 

estimated to have registered a deficit of 28% of GDP in 2012. The non-oil deficit in 

absolute terms is forecast to rise through the next three years. IMF projects that the price 

of crude that is needed to balance the government budget will rise to US$ 98 per barrel 

by 2016. Our fiscal breakeven estimate is somewhat lower than the IMF figures, but 

agree on the path. The fiscal breakeven is estimated to have declined to around US$ 70 

per barrel in 2012 because of higher than expected Saudi oil production to compensate 

for the decline in Iranian sales due to sanctions. The budget registered a surplus of US$ 

103.1 billion (14.2% of GDP) in 2012 and is expected to register a surplus of US$ 77.1 

billion in 2013 (10% of GDP). 

The stimulus packages that were unveiled in response to regional unrest provided new 

impetus to credit growth. Annual loan growth has accelerated from single digits in much 

of 2011 to 15.7% y-o-y by November 2012, driven by loans to the private sector which 

were up by 15.4% y-o-y. Government passed a new law on mortgages in early July and 

this is expected to clarify foreclosure procedures and stimulate bank lending against

Saudi Arabia 

property. Banks previously extended such loans against salary. This reform is in line with 

authorities’ plans to build 500,000 new houses over the medium term. 

In 2013, real GDP growth is forecast to slow to +4.6% as oil production growth is 

expected to taper off with Saudi focus being more on oil price stability. The current 

account surplus is expected to ease to 17.4% of GDP in line with our assumption of a 

moderation in energy prices. The budget surplus is forecast to ease to 10% of GDP. 


Relentless decline in the number of subscribers 

There were 279,654 subscribers (-6.8% y-o-y, -4.8% YTD) in 239 funds in Saudi 

Arabia at end-2012Q3, according to data from the Saudi Arabian Monetary Agency 

(SAMA). The number of subscribers has continued to fall relentlessly and was the lowest 

since 2004. The number of mutual funds subscribers declined by 26,510 in 2011 and 

14,251 in 9M2012. 

Fund assets stood at US$ 24 billion (+5.4% y-o-y, +9.6% YTD) , of which US$ 5.14 

billion were in foreign assets (+6.4% y-o-y, +9.2% YTD) and US$ 18.88 billion in 

domestic assets (+5.1% y-o-y, +9.7% YTD). Fund assets were down by -13.2% in 2011 

driven by a fall in foreign and domestic assets.

Saudi Arabia 

Fund Industry Profile 1992-2012Q3 

(millions of U.S. dollars where relevant, end-period) 

Period 

No of 

Funds 

Domestic 


Foreign 


Total 

Assets Subscribers 

1992 52 1.41 1.89 3.31 33,162 

1993 60 1.97 2.24 4.21 34,170 

1994 61 1.41 1.82 3.23 30,945 

1995 71 1.54 1.92 3.46 33,051 

1996 83 2.17 2.27 4.44 45,136 

1997 104 2.99 2.73 5.71 63,307 

1998 121 3.2 3.47 6.67 69,543 

1999 134 4.26 4.99 9.25 79,322 

2000 138 4.42 5.86 10.28 95,800 

2001 138 8.11 5.24 13.35 173,999 

2002 143 8.75 4.26 13.02 165,044 

2003 170 9.93 4.44 14.37 172,197 

2004 188 11.86 4.22 16.09 198,357 

2005 199 30.84 5.68 36.53 568,284 

2006 214 16.36 6.07 22.43 499,968 

2006 252 21.3 6.72 28.03 426,085 

2008 262 16.34 3.61 19.95 374,975 

2009 244 19.77 4.11 23.88 356,331 

2010 243 19.85 5.41 25.26 320,415 

2011 249 17.21 4.71 21.92 293,905 

2012Q3 239 18.88 5.14 24.02 279,654 

Source: SAMA 

In 2010, the Saudi fund industry remained concentrated with the top 10 firms accounting 

for 99% of subscribers and 96% of fund assets. 

The steady decline in subscriber numbers continued in 2010 and 2011. 369,927 new 

subscribers had bought funds during the stockmarket bubble in 2005. These investors 

have gradually been exiting funds. Fund assets rose in 2010 notwithstanding the decline 

in subscriber numbers, but gave up gains in 2011. At the end of 2011Q3, fund assets 

were 38% lower than in 2005. The decline in the number of total funds also continued.

Saudi Arabia 

Fund Industry Breakdown by Asset Manager in 2011 

(millions of SAR where relevant) 

Company 


Funds 

Assets Total Number of 

Closedendeended 

Open- 


Assets Assets Assets Subscribers 

Al Awwal For 

1 2 395.9 20.6 416.5 273 

Financial Services 

Al Bilad Investment 0 5 755.6 38.9 794.5 34,842 

Al Jazira Capital 2 3 381.8 410.0 791.8 1,076 

Al Rajhi Financial 0 14 7,150.1 1,005.1 8,155.2 18,044 

Itqan Capital (Al 0.0 1 21.8 0.0 21.8 66 

Tawfeek Financial) 

ANB Investment 1 16 2,878.8 140.9 3,019.7 9,773 

Audi Saudi Arabia 0 2 70.5 18.3 88.8 23 

Bakheet Investment 0 3 116.3 9.5 125.8 572 

Saudi Fransi Capital 1 10 3,324.2 128.1 3,452.3 16,278 

EFG-Hermes KSA 0 1 44.2 0.0 44.2 10 

Falcom Financial 1 8 454.6 12.6 467.2 836 

Global Investment 0 2 400.9 0.0 400.9 17 

Gulf Investments Co 0.0 4 38.8 0.6 39.4 17 

HSBC Saudi Arabia 1 21 7,099.6 728.3 7,827.9 46,040 

Jadwa Investment 0 14 187.2 154.2 341.4 173 

KSB Capital Group 1 4 268.8 0.0 268.8 713 

Middle East Fin. 0 2 78.1 0.0 78.1 8 

Morgan Stanley SA 0 1 64.0 0.0 64.0 5 

NCB Capital 0 25 19,945.1 3,812.1 23,757.2 44,586 

Rana Investment 0 1 3.1 0.0 3.1 8 

Riyad Capital 1 33 7,696.1 5,389.4 13,085.5 75,812 

Al Istithmar (SAIB 

BNP PARIBAS AM) 

0.0 10 947.5 267.1 1,214.6 881 

Samba Capital 0 18 9,997.7 5,355.9 15,353.6 39,517 

Saudi Hollandi Cap 1 22 1,805.8 107.4 1,913.2 3,892 

Shua'a Capital Co 0 3 66.9 55.8 122.7 17 

The Investor Co 1 2 171.8 0.0 171.8 147 

Watan Investment 0 1 2.2 0.0 2.2 9 

Al Inma Invest. 0 2 76.6 0.0 76.6 171 

Al Khabeer Cap 0 1 20.0 3.0 23.0 1 

Al Nefaie Investment 0 1 1.4 0.0 1.4 6 

Arbah Capital 0 1 12.1 0.0 12.1 3 

Blominvest S.Arabia 0 1 50.1 0.0 50.1 6 

Derayah Financial 0 3 3.0 1.2 4.2 72 

Muscat Capital 0 1 0.0 3.7 3.7 11 

Source: Saudi Arabian Monetary Agency

Saudi Arabia 

Annual Change in Number of Funds, Assets & Subscribers by Asset Manager 

(millions of SAR where relevant, 2011) 

Company 


Funds 

Assets Total Number of 

Closedendeended 

Open- 


Assets Assets Assets Subscribers 

Al Awwal For 

Financial Services 1 0 274 16 289 248 

Al Bilad Investment 0 0 -155 -11 -166 -2,744 

Al Jazira Capital 2 -2 111 16 127 -182 

Al Rajhi Financial -2 2 -68 196 129 -1,775 

Itqan Capital (Al 

Tawfeek Financial) 0 -3 -35 -8 -43 -89 

ANB Investment 1 0 377 -11 366 -91 

Audi Saudi Arabia 0 -1 -77 -57 -134 -10 

Bakheet Investment 0 1 -20 10 -10 -27 

Saudi Fransi Capital 0 -1 -1,114 -96 -1,211 -3,435 

EFG-Hermes KSA 0 0 -10 0 -10 -4 

Falcom Financial 1 -1 69 4 73 -245 

Global Investment 0 0 -21 0 -21 -3 

Gulf Investments Co 0 0 -16 0 -16 -18 

HSBC Saudi Arabia 0 2 -804 -212 -1,016 -7,235 

Jadwa Investment 0 0 -216 -793 -1,008 -41 

KSB Capital Group 0 1 -29 0 -29 409 

Middle East Fin. 0 1 59 0 59 1 

Morgan Stanley SA 0 0 1 0 1 1 

NCB Capital -1 1 -5,653 -4,761 -10,414 -4,530 

Rana Investment 0 0 -8 0 -8 -1 

Riyad Capital 1 0 -884 -862 -1,746 -2,622 

Al Istithmar (SAIB 

BNP PARIBAS AM) -1 0 -186 -253 -438 -342 

Samba Capital 0 -3 -1,614 4,380 2,766 -3,710 

Saudi Hollandi Cap -2 0 -224 -173 -397 -464 

Shua'a Capital Co 0 0 45 27 72 5 

The Investor Co 1 0 155 -56 99 136 

Watan Investment 0 0 -2 0 -2 -6 

Al Inma Invest. 0 2 76.6 0.0 76.6 171 

Al Khabeer Cap 0 1 20.0 3.0 23.0 1 

Al Nefaie Investment 0 1 1.4 0.0 1.4 6 

Arbah Capital 0 1 12.1 0.0 12.1 3 

Blominvest S.Arabia 0 1 50.1 0.0 50.1 6 

Derayah Financial 0 3 3.0 1.2 4.2 72 

Muscat Capital 0 1 0.0 3.7 3.7 11 


Saudi Arabia 

In 2011, the top 5 firms accounted for 81.9% of total subscribers and 83% of fund assets, 

roughly the same level as in recent years. 

Top Fund Management Companies by Assets & Subscribers in 2011 

Top Firms by Fund Assets 

Top Firms by Fund Subscribers 

HSBC 

Saudi Arabia 

9.3% 

Samba Capital 

13.3% 

Al Rajhi Financial 

Services 

8.5% 

Riyad Capital 

15.7% 

Others 

17.2% 

NCB Capital 

36.1% 

Source: Saudi Arabian Monetary Agency 

Samba Capital 

13.5% 

NCB Capital 

15.3% 

Al Bilad 

Investment 

11.7% 

HSBC Saudi 

Arabia 

16.6% 

Others 

18.3% 

Riyad Capital 

24.5% 

Top Fund Management Companies by Assets 

(millions of U.S. dollars, 2008-2011) 

25,000 

US$ million 

20,000 

15,000 

10,000 

5,000 

CAAM Saudi Fransi 

Al Rajhi Financial Services 

HSBC Saudi Arabia 

Samba Capital 

Riyad Capital 

NCB Capital 

Others 

0 

2008 2009 2010 2011 


Saudi Arabia 

Top Fund Management Companies by Number of subscribers 

(millions of U.S. dollars, 2008-2011) 

350,000 

Number of Subscribers 

300,000 

250,000 

200,000 

150,000 

100,000 

50,000 

Al Bilad Investment 

Samba Capital 

NCB Capital 


Riyad Capital 

Others 

0 

2008 2009 2010 2011 


Number of Funds by Type 

(end of period, annual data) 

Int'l Equity Local Equity GCC Equity Money Market 

Other Debt RE 

300 

4 

4 

10 10 

250 

7 6 6 

11 

6 6 7 

3 

9 

59 20 21 29 

66 

32 

200 

9 

51 

61 56 50 

57 

50 

150 

49 

21 

44 

16 

13 

100 12 

35 45 57 

27 

154 153 146 

50 

68 74 74 73 

0 

2006 2007 2008 2009 2010 2011 2012 

Source: Capital Market Authority * For 2010-2012 blue bar represents figure for all 

equity funds. **Note that CMA data do not match SAMA data because CMA 

appears to count certain varieties of a product separately, while SAMA does not. 

The chart above – solely indicative - is based on CMA data, but the other category 

has been used as a balancing item to arrive at the same count as SAMA data. 

ETFs have been added to the equity category. 2012 data are estimates.

Saudi Arabia 

New Funds in 2011 

Fund Name Type Fund Manager 

1 Al Awwal Periodical Income Fund Equity Al Awwal Capital 

2 Al Jazira Global Emerging Markets Equity Al Jazira Capital 

3 Al Jazira Residential Projects Fund RE Al Jazira Capital Company 

4 Al Khair Capital Sukuk Plus Fund Sukuk Al Khair Capital 

5 Al Khair Saudi Arabia Equity Al Khair Saudi Arabia Equity 

6 Al Nefaie Saudi Equity Trading Equity Al Nefaie Investment Group 

7 Al Rajhi Multi Asset Conservative Balanced Al Rajhi Capital 

8 Al Johar Saudi Equity Fund Equity Aloula Geojit Company 

9 Al Mubarak Diyar Jeddah Real Est RE Arab National Investment 

10 Bakheet Qatari Trading Equity Equity Bakheet Investment Group 

11 Blom Saudi Arabia Fund Equity BlomInvest Saudi Arabia 

12 Derayah Comprehensive Balanced FoF Derayah Financial Corporation 

Derayah Comprehensive 

13 Conservative FoF Derayah Financial Corporation 

14 Derayah Comprehensive Growth FoF Derayah Financial Corporation 

15 Al Rabia Real Estate Fund RE Falcom Financial Services 

16 HSBC Amanah Commodity Index FoF HSBC Saudi Arabia 

17 HSBC Amanah Saudi 20 ETF Equity HSBC Saudi Arabia 

18 KSB City Fund RE KSB Capital Group 

19 KSB Qatar Equity Fund Equity KSB Capital Group 

20 KSB Real Estate Opportunity Fund RE KSB Capital Group 

21 MEFIC GCC Equity Fund Equity Middle East Financial Investment 

22 MEFIC Real Estate Income Fund RE Middle East Financial Investment 

23 Al Ahli GCC Growth and Income Equity NCB Capital 

24 Al Ataa Saudi Equity Fund Equity Samba Capital & Invest. Mgmt 

Al Nafees Global Commodities 

Samba Capital & Invest. Mgmt 

25 Equity 

Equity 

26 Samba Capital Americas Equity Equity Samba Capital & Invest. Mgmt 

27 Samba Capital Asian Equity Fund Equity Samba Capital & Invest. Mgmt 

28 Samba Capital European Equity Equity Samba Capital & Invest. Mgmt 

29 Samba Capital Global Equity Fund Equity Samba Capital & Invest. Mgmt 

30 Al Yusr Target Date Multi Asset* FoF Saudi Hollandi Capital 

Source: Capital Market Authority *Saudi Hollandi Capital’s Multi Asset Fund has 

multiple (10) date fund approvals.

Saudi Arabia 

According to the Capital Market Authority, the aggregate number of equity funds in 2011 

was 150, down from 154 in 2010 1 . These had assets of US$ 7.1 billion or 32.4% of fund 

assets. Local equity assets comprised 64.2% of overall equity fund assets, while 

international equities accounted for another 30%, with the remainder invested in other 

GCC stocks. Money market funds were still the second most numerous with 50 in 2011, 

down from 56 in 2010. These accounted for 60.4% of fund assets with over US$ 13.2 

billion under management at the end of 2011. In 2011, non-bank financial institutions 

(NBFIs) launched 15 new funds, while entities owned by banks launched another 15 2 . In 

2012, there were 15 new fund launches, 10 of which were by bank subsidiaries. 

New Funds in 2012 

Date Fund Name Type Fund Manager 

1 15/1/2012 Amanah Sukuk Fund Sukuk HSBC Saudi Arabia 

2 18/3/2012 Ithmar Saudi Equity Fund Equity Al Bilad Investment 

3 29/4/2012 Amanah GCC Equity Income Equity HSBC Saudi Arabia 

4 9/9/2012 

Emerging Markets Fixed 

Income 

Bond Saudi Fransi Capital 

5 9/9/2012 

Al Ahli Global Natural 

Resources 

Other NCB Capital 

6 11/11/2012 Arab Markets Balanced Fund Other BlomInvest Saudi Arabia 

7 2/12/2012 Multi Assets Defensive Fund Other Al Inma Investment 

8 - Al Rajhi MENA Dividend Growth Equity Al Rajhi Capital 

9 - Al Awwal RE Development RE Alawwal Capital 

10 - Al Khabeer Liquidity - Hasseen 

Money 

Market 

Al-Khabeer Capital 

11 - Amanah Saudi Freestyle Equity Equity HSBC Saudi Arabia 

12 - KSB Furas Real Estate RE KSB Capital Group 

13 - MEFIC Real Estate Income RE ME Financial Investment 

14 - Riyad Real Estate (Burj Rafal) RE Riyad Capital 

15 - 

The Investor Real Estate Fund 

The Investor For 

RE 

For Multiple Projects 

Securities 

16 - Safwat Obhur Real Estate* RE Itqan Capital 

17 - Real Estate Income Fund* RE Itqan Capital 

Source: Capital Market Authority, Tadawul, Websites *Private placements 

1 CMA mutual fund data tables appear to exclude exchange traded funds. The chart 

above includes the three ETFs which currently exist, but the text provides CMA figures. 

2 

Saudi Hollandi Capital received multiple approvals according to CMA. The figure cited 

excludes these.

Saudi Arabia 

Number of New Funds by Sponsor Category 


40 

35 

30 

25 

20 

15 

10 

5 

0 

Bank Sponsored 

Others 

2007 2008 2009 2010 2011 2012 

Source: Capital Market Authority *Saudi Hollandi Capital received multiple 

approvals for its Multi Asset Fund in 2011, according to CMA. The figure cited 

excludes these. 

Number of New Funds by Type 


40 

35 

30 

25 

20 

15 

10 

5 

0 

2008 2009 2010 2011 2012 

Other 

Fund of Funds 

Real Estate 

Money Market 

Debt 

Intl Equity 

GCC Equity 

Local Equity 

Source: Capital Market Authority 

In 2011, 20 of the 30 new funds were local currency denominated. 10 were denominated 

in US Dollars. In 2012, 11 of the 15 new funds were in local currency, the rest were in 

US$.

Saudi Arabia 

Number of New Funds by Currency Denomination 


45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

SAR USD Euro 

2007 2008 2009 2010 2011 2012 


Fund Closures in 2012 

Fund Name Type Fund Manager 

1 Al Rajhi Global Small Cap Equity Equity Al Rajhi Capital 

2 Al Durrah Liquidity Fund Dollar* Money Market Al Tawfeek Capital* 

3 Al Barq Telecom Fund Equity Al Tawfeek Capital 

4 Alassas Egyptian Equity Fund Equity Al Tawfeek Capital 

5 Amanah Asia Pacific Fund Equity HSBC Saudi Arabia 

6 Amanah Pan-European Eq Fund Equity HSBC Saudi Arabia 

7 Jadwa Emerging Equity Fund Equity Jadwa Capital 

8 Jadwa World Equity fund Equity Jadwa Capital 

9 Jadwa Aggressive Fund Other Jadwa Capital 

10 Jadwa Balanced Allocation Fund Other Jadwa Capital 

11 Jadwa Conservative Fund Other Jadwa Capital 

12 Jadwa Africa Equity Freestyle Equity Jadwa Capital 

13 Jadwa USD Murabaha Fund Money Market Jadwa Capital 

14 SAIB Gulf Industrial Co. Fund Equity SAIB Capital 

15 Al Fareed Fund Equity 



16 Al Razeen Euro Fund 


Money Market 


Source: Tadawul *Al Tawfeek Capital was renamed Itqan Capital on January 2012. 

Saudi Riyal Al Durrah Liquidity Fund is offered by Itqan Capital.

Saudi Arabia 

Number of Subscribers by Fund Type 



500,000 

400,000 

300,000 

200,000 

100,000 

50,787 

448,612 

52,923 

373,037 

Equity Other 

78,312 

81,269 

296,663 275,062 

72,052 

67,302 

247,771 226,204 

- 

2006 2007 2008 2009 2010 2011 


Assets of Funds 1992-2012Q3 

(billions of U.S. dollars, end of period, annual data except for 2012Q3 which is quarterly) 

US$ billion 

40 

35 

30 

25 

20 

15 

10 

5 



600 

500 

400 

300 

200 

100 

Number of Subscribers (000) 

0 

1992 1996 2000 2004 2008 2012Q3 

0 


Saudi Arabia 

Annual Growth Rates of Fund Assets & Subscriber Numbers 



140 

120 

100 

80 

60 

40 

20 

0 

-20 

-40 

-60 

Asset Growth 

Subscriber Growth 



Fund Assets by Category 

(billions of U.S. dollars where relevant, end of period) 

End of Open - ended Close - ended Total 

Period Number Assets Number Assets Number Assets 

1996 81 4.3 2 0.1 83 4.4 

1997 98 5.2 6 0.5 104 5.7 

1998 113 6.3 8 0.4 121 6.7 

1999 125 8.5 9 0.7 134 9.2 

2000 136 10.3 2 0 138 10.3 

2001 137 13.3 1 0.1 138 13.3 

2002 139 12.8 4 0.2 143 13 

2003 166 14.2 4 0.2 170 14.4 

2004 176 15.7 12 0.4 188 16.1 

2005 188 36.2 11 0.3 199 36.5 

2006 198 21.8 14 0.7 212 22.5 

2007 - - - - 252 28 

2008 243 19.1 19 0.8 262 20 

2009 235 23.4 9 0.4 244 23.9 

2010 233 25 10 0.31 243 25.3 

2011 239 21.5 10 0.39 249 21.9 

2012Q3 228 23.6 11 0.45 239 24.0 


Saudi Arabia 

SAMA data indicate that 95.4% of the total number of funds, holding 98.1% of total fund 

assets were open-ended in 2012Q3. Average assets of open-ended funds stood at US$ 

103 million in 2012Q3. Average fund assets have remained at about this level since 

2000 except for 2005 when average assets spiked to US$ 193 million. 

Saudi Arabia Average Fund Assets (Open-Ended Fund Assets / Number of Funds) 

(millions of U.S. dollars, end of period, annual data except for 2012Q3 which is quarterly) 

200 

US$ million 

150 

100 

50 

0 

1996 2000 2004 2008 2012Q3 


Breakdown by Category - Conventional versus Sharia Compliant 

Breakdown by Assets (Jun-2010) Breakdown by Number (Dec-2012) 

Conventional, 

US$ 3.66 bn, 17% 

Conventional, 86, 

35.2% 

Sharia 

Compliant, 

US$17.8bn, 83% 

Sharia 

Compliant, 158, 

64.8% 

Source: Tadawul

Saudi Arabia 

In terms of investment objective, 68% of funds had a growth objective reflecting the 

number of equity funds. However,funds with a growth objective are a significantly smaller 

proportion of total fund assets given the large asset size of money market funds. 

Breakdown of Fund Numbers by Objective* 

(December 2012) 

Income & 

Growth 

10.2% 

Income 

9.8% 

Capital 

Preservation 

11.9% 

Growth 

68.0% 

Source: Tadawul 

Breakdown of Fund Assets by Type 

(2012Q3) 

Summary Breakdown 

Real Estate 

2.1% 

Other 

1.3% 

Money Market 

59.1% 

Equity 

32.7% 

Bonds 

4.7% 

Other Domestic 


1.1% 

Foreign Money 

Market 

7.5% 

Domestic Money 

Market 

51.6% 

Detailed Breakdown 

Other Foreign 


0.2% 

Real Estate 

2.1% 

Domestic Equity 

21.5% 

Foreign Equity 

11.2% 

Domestic Bonds 

2.2% 

Foreign Bonds 

2.4% 


Saudi Arabia 

At the end of 2012Q3, SAMA data indicate that 76.5% of fund assets were domestically 

focused. Equity fund assets stood at US$ 7.9 billion at the end of September 2012. 

The share of money market funds in total fund assets was 58.4% in 2012Q3, up from 

57.5% in 2011 and remained high in historical terms as a percentage of total fund 

assets. Money market fund assets stood at US$ 14.2 billion (59% of the total) according 

to SAMA data. Share of money market fund assets had been as low as 5.9% of the total 

in 2005 at the peak of the stockmarket boom. Share of money market funds has 

historically ranged between 30% to 40%. 

Fund Assets by Type 

(billions of U.S. dollars, end of period, annual data except for 2012Q3) 

US$ Billion 

40 

35 

30 

25 

20 

15 

Other 

Real Estate 

Money Market 

Bonds 

Equity 

10 

5 

0 

1996 2000 2004 2008 2012Q3 


Saudi Arabia 

Trends by Fund Type (based on data for Saudi domiciled funds) 

Overview 

In 2012H1, fund assets in the dataset increased by 6% from end-2011. These funds 

saw net inflows of US$ 1.4 billion. This was largely attributable to an increase in 

money market fund assets. In 2011, fund assets declined by 14% year-on-year. These 

funds saw net outflows of US$ 3.6 billion. This was largely attributable to a decrease in 

money market fund assets. 





13,197 14,348 Money Market 9% 1,148 

112 179 Fixed Income 59% 66.2 

8,429 8,566 Equity 2% 131.4 

266 326 Other 22% 56.8 





2010 2011 

15,477 13,197 Money Market -15% (2,284) 

110 112 Fixed Income 2% 2.1 

9,560 8,429 Equity -12% (1,133) 

462 266 Other -42% (188) 

Source: Lipper, a Thomson Reuters Company

Saudi Arabia 

Top 10 Saudi Domiciled Funds by Assets 



1 Al Ahli Saudi Riyal Trade Fund Money Market NCB Capital 3,464 



4 Al Ahli Diversified SAR Trade Trade Finance NCB Capital 1,647 

5 HSBC Amanah Saudi Equity Equity HSBC S. Arabia 731 



8 HSBC Amanah SAR Trading Trade Finance HSBC S. Arabia 569 

9 Al Raed Saudi Equity Fund Equity Samba Capital 548 



Equity Funds 

In 2012H1, Saudi domiciled equity fund assets under management increased by 

2%. Equity funds witnessed net inflows of US$ 131 million. Sector equity fund assets 

declined by 8%, IPO fund assets increased by 57.4%, while index fund assets rose by 

0.2%. In 2011, Saudi domiciled equity fund assets under management declined by 12%. 

Equity funds witnessed net outflows of US$ 1.14 billion. Sector equity fund assets 

increased by 8.3%, IPO fund assets under management fell by 71%, while index fund 

assets increased by 30%.

Saudi Arabia 

Equity Fund Assets by Geographic Focus 

(billions of U.S. dollars, end of period) 

US$ billion 

16 

14 

12 

10 

8 

6 

4 

2 

0 

1.0 

GCC Equity 

4.0 

0.6 

3.7 

Int'l Equity 

Local Equity 

0.5 0.5 

11.6 

0.4 2.5 2.7 

0.4 

1.8 

2.1 

8.3 

4.4 4.9 5.1 4.6 

2006 2007 2008 2009 2010 2011 


Top 10 Saudi Equity Funds by Assets 



1 HSBC Amanah Saudi Equity Equity HSBC S. Arabia 731 






7 RiyadC-European Growth Equity Riyad Capital CJSC 418 

8 American Stock Fund Equity Riyad Capital CJSC 269 


10 Asayel Fund Equity Al Bilad investment 189 

Source: Lipper Rankings, Lipper, a Thomson Reuters Company

Saudi Arabia 

Fund Assets in Tadawul by Sector 

(billions of U.S. dollars, end of period) 

Banks & Fin Serv Petrochemicals Cement Retail 

Agr. & Food Ind Energy/Utilities Telecom/IT Multi-investment 

Insurance Industrial Investment Construction RE Development 

Transportation Media Hotels/Tourism Other 

2011 

2010 

2009 

2008 

0.0 1.0 2.0 3.0 4.0 5.0 

US$ billion 



In 2012H1, Saudi Arabia domiciled fixed income fund assets increased by 59%. These 

witnessed inflows of US$ 66 million. In 2011, Saudi Arabia domiciled fixed income fund 

assets increased by 2%. These witnessed inflows of US$ 2.1 million. 

Top Saudi Domiciled Fixed Income Funds by Assets 



1 HSBC Amanah Sukuk Fund Sukuk HSBC Saudi Arabia 58 

Al Ahli USD Sukuk & 

2 

Murabaha 

Sukuk NCB Capital 47 

3 International Bond Fund Fixed Income Riyad Capital CJSC 27 


5 Al Yusr Murabaha & Sukuk Sukuk Saudi Hollandi Cap. 15 


Saudi Arabia 


In 2012H1, money market fund assets increased by 9% from US $ 13.2 billion at 

end-2011 to US$ 14.4 billion. Estimated net inflows to money market funds stood at 

US$ 1.15 billion. Within this category, trade finance funds saw estimated net inflows 

of US$ 564 million (fund assets increased by 8.7%), while conventional money market 

funds saw inflows of US$ 584 million, with an 8.8% increase in assets. In 2011, money 

market fund assets decreased by 15% from US $ 15.48 billion at end-2010 to US$ 13.2 

billion. Estimated net outflows from money market funds stood at US$ 2.3 billion. Within 

this category, trade finance funds accounted for estimated net inflows of US$ 526 million 

(fund assets increased by 8.8%), while conventional money market funds saw outflows 

of US$ 2.8 billion, with a 30% decline in assets. 

Top Saudi Money Market Funds by Assets 



1 AlAhli SAR Trade Fund Money Market NCB Capital 3,464 



3 

Commodity 

Money Market Al Rajhi Capital 2,102 



6 HSBC Amanah SAR Trading Trade Finance HSBC Saudi Arabia 569 






Saudi Arabia - Directory 

Oman 


Ajeej Capital 00966 1-496-1166 www.ajeej.com info@ajeej.com Thimar Al Jazira Building, 4th Floor, 

Fawaz Bin Abdulaziz Street, Rabwa 

Area, P.O. Box 295517, Riyadh 

11351, Saudi Arabia 

Al Awwal Financial 

info@alawwalfs.com Bin Hamdan Commercial Center, 2nd 

Services 

Al Bilad Investment 

Company 

00966 9200- 

17180 

www.alawwalfs.co 

m 

00966 1-203-9899 www.albiladinvest. 

com 

Al Rajhi Capital 00966 1-460-0423 www.alrajhicapital.com 

Alinma Investment 

Company 

00966 1-218-5555 www.alinmainvest. 

com 

Aljazira Capital 00966 2-669-2669 www.aljaziracapital 

.com.sa 

Altawfeek Financial 

Group 

00966 2-699-6888 www.altawfeek.co 

m 

clients@albiladinvest 

.com 

Floor, Al Tahlia Street, P.O. Box 

51536, Jeddah 21553, Makkah, Saudi 

Arabia 

Bank AlBilad Building,1st Floor, King 

Abdullah Road, Al Wuroud Area, P.O. 

Box 140, Riyadh 11411, Saudi Arabia 

customerservice@alr Al Rajhi Capital Building, King 

ajhi-capital.com Fahad Road, Olaya Area, P.O. Box 

5561, Riyadh 11432, Saudi 

Arabia 

info@alinmainvestm Princess Anoud Tower, 13th Floor, 

ent.com 

King Fahed Street, Al Olaya Area, 

P.O. Box 66674, Riyadh 11586, 

Saudi Arabia 

contactus@aljaziraca Al Jazira Capital Building, 1st 

pital.com.sa 

floor, Al Madinah Road, Mosaedia 

Area, P.O. Box 6277, Jeddah 

21442, Makkah , Saudi Arabia 

info@altawfeek.com Dallah Al Baraka Tower, Palestine 

Street, Al Rehab Area, P.O. Box 

8021, Jeddah 21482, Makkah , 

Saudi Arabia 

322


Oman 

ANB Invest 00966 1-406-2500 www.anbinvest.co 

m.sa 

Arbah Capital 00966 3-831-6444 www.arbahcapital.c 

om 

Audi Capital 00966 1-219-9300 www.audicapital.co 

m 

Info@anbinvest.com. 

sa 

info@arbahcapital.co 

m 

contactus@audicapit 

al.com 

Bayt 7 Building, 7th floor, King 

Faisal Street, Mouraba Area, P.O. 

Box 220009, Riyadh 11311, 

Saudi Arabia 

Samic Building, 8th Floor, Al 

Khaleej Street, P.O. Box 8807, 

Dammam 31492, Al Sharqiyah , 

Saudi Arabia 

Centria Building, 3rd Floor, Olaya 

Road, Olaya Area, P.O. Box 

250744, Riyadh 11391, Saudi 

Arabia 

Bakheet Investment 

Group 

00966 1-419-1797 www.bfasaudi.com all@bfasaudi.com Al Akaria Complex II, 7th Floor, Al 

Olaya Street, P.O. Box 63762, 

Riyadh 11526, Saudi Arabia 

CAAM Saudi Fransi 00966 1 289 1348 www.caamsf.com.s 

a 

Falcom Financial 

Services 


House KSA 


Limited 

00966 1-211-4727 www.falcom.com.s 

a 

salothman@caamsf.c 

om.sa 

EFG-Hermes KSA www.efghermes.com 

amsales@efghermes.com 

addingvalue@falcom 

.com.sa 

00966 1 299 4100 www.globalinv.net info@globalinv.com. 

sa 

00966 1-299-2314 www.hsbcsaudi.co 

m 

saudiarabia@hsbc.co 

m 

Falcom Financial Services 

Building, Olaya Street, Olaya 



Global Tower, Al Ma’ather Street, 

Riyadh, PO. Box 66930, Riyadh 

11586, Kingdom of Saudi Arabia 

HSBC Building, 3rd and 4th Floor, 

Al Murooj Area, P.O. Box 9084, 


323


Oman 

Jadwa Investment 00966 1-279-1111 www.jadwa.com info@jadwa.com Sky Towers, 2nd-4th Floor, King 

Fahad Road, Olaya Area, P.O. Box 


Khalijia Invest 00966 1-212-9999 www.khalijiainvest. 

com 

info@khalijiainvest.c 

om 

Arabia 

Localizer Mall, 1st Floor, Prince 

Mohammad Bin Abdul Aziz Street, 

Olaya Area, P.O. Box 55755, 


KSB Capital Group 00966 1-207-9979 www.ksb.com.sa info@ksb.com.sa KSB Building, Olaya Street, Al 

Middle East 

Financial Investment 

Company 

Morgan Stanley 

Saudi Arabia 

Morouj Area, P.O. Box 395737, 


00966 1-218-6666 www.mefic.com.sa info@mefic.com.sa Al Mada Building, 1st Floor, King 

Fahed Road, Olaya Area, P.O. Box 


Arabia 

00966 1-218-7000 www.morganstanle 

y.com 

instfeed@ms.com Al Rashid Building, 10th Floor, Al 

Maathar Street, P.O. Box 66633, 


NCB Capital 00966 1-874-7106 www.ncbc.com csr@ncbc.com NCB Capital Building, Tower B, 

4th Floor, Al Maathar Street, Al 

Maathar Area, P.O. Box 22216, 


Rana Investment 

Company 

Rasmala 

Investments (Saudi) 

00966 1-263-0080 www.ranainvestme 

nt.com 

contact@ranainvest 

ment.com 

Al Hamad Building, 1st and 2nd 

Floor, Olaya Street, P.O. Box 


Arabia 

00966 1-440-9888 www.rasmala.com saudi@rasmala.com Akaria Plaza, 1st Floor, Olaya 

Street, P.O. Box 58055, Riyadh 


324


Oman 

Riyad Capital 00966 1-203-6800 www.riyadcapital.c 

om 



info@riyadcapital.co 

m 

Riyad Bank Building, 5th Floor, 

King Abulaziz Street, Al Morabaa 



00966 1-474-2121 www.saibbnpp.com info@saibbnpp.com Saudi Investment Bank Building, 

Sambacapital 00966 1-211-7400 www.sambacapital. 

com 

Saudi Hollandi 

Capital Company 

SHUAA Capital 

Saudi Arabia 

The Investor Co for 

Securities 

Watan Investment 

and Securities 

Company 

info@sambacapital.c 

om 

1st Floor, Al Maazar Street, Al 

Wazarat Area, P.O. Box 5556, 


Kingdom Center Building, 16th 

Floor, Aruba Street, Olayya Area, 

P.O. Box 220007, Riyadh 


00966 1-276-6345 www.shc.com.sa info@shc.com.sa Al Rasheed Building, Al Maathar 

Street, Maathar Area, P.O. Box 


Arabia 

00966 1-291-0070 www.shuaacapitals 

a.com 

00966 1-200-7002 www.theinvestor.co 

m.sa 

0966 1-419-0600 www.wataninvest.c 

om 

saudiarabia@shuaac 

apital.com 

info@theinvestor.co 

m.sa 

contacts@wataninve 

st.com 

Dareen Center, 2nd Floor, Al Ahsa 

Street, Malaz Area, P.O. Box 


Arabia 

Jumaiah Towers, 2nd Floor, King 

Fahd and King Abdullah Road 

Intersect, P.O. Box 67838, Riyadh 


Akkaria 2 Building, 7th Floor, 

Olaya Street, P.O. Box 99781, 


325



Oil output up 

Higher oil production and prices have been positive for the UAE economy. The country 

raised oil output in 2011 to compensate for the disruption of the Libyan oil supply. In 

2011, real GDP growth accelerated to +4.2% y-o-y, up from +1.3% in 2010. By sector, oil 

and gas sector accounted for 49% of 2011 output growth. UAE nominal GDP rose to 

US$ 339 billion (+19.3% y-o-y) driven by a rise in the average oil price to US$ 105/bl 

(+35% y-o-y). UAE was able to raise output further in 2012 as sanctions led to a decline 

in Iranian sales. Official estimates for 2012 real GDP growth is about 4%. 

UAE cementing role as a regional hub 

UAE has also benefited as a safe haven in a period of regional turmoil, cementing its role 

as a regional hub. Property prices in a number of areas in Dubai have risen in 2012. 

Average residential property price was up by +13.4% between December 2011 and 

September 2012 (+13.5% y-o-y in September). In January-August, Dubai passenger air 

traffic was up by +13.4% y-o-y, while Abu Dhabi passenger air traffic was up by +22% y- 

o-y in H1. 

UAE registered a trade surplus of US$ 79.5 billion (23% of GDP) in 2011. Value of 

exports were a record US$ 282 billion (+32% y-o-y and 93.4% of FX inflows). Value of oil 

and related exports were US$ 112 billion (+50% y-o-y). Imports were a record US$ 202 

billion (+23% y-o-y and 75% of FX outflows) mirroring the growth in exports given the 

role of the UAE as a re-export centre. The current account was estimated to have 

registered a surplus of US$ 30.7 billion (9.1% of GDP) in light of these developments. 

We assume oil production growth may be limited in 2013 and are, thus, penciling in real 

GDP growth of +3.2% y-o-y. UAE is in a position to raise output given availability of new 

capacity if events continue to unfold as they have in 2012 with Iranian output declining. 

This would result in an upward revision to our current growth estimate. Forecasts point to 

comfortable current account surpluses of 8.2% and 7.9% of GDP in 2012 and 2013 

which will allow further accumulation of assets by Sovereign Wealth Funds. 

329



There are 51 deposit banks in the UAE (of which are 23 local) as well as 22 investment 

companies. Comprehensive data on the fund industry in the United Arab Emirates are 

not published officially. A list of financial institutions registered with CBUAE and DIFC are 

provided at the end of this chapter. In the absence of comprehensive fund industry data 

from official sources, available data on the industry largely come from factsheets of funds 

operated largely by regional/local entities. Fund data for foreign banks/institutions 

operating in the UAE are generally not readily available. 

Assets under Management - Selected Companies 


Company Total AuM As of Funds As of 

Emirates NBD 1,470 Dec-12 802 Dec-12 

National Bank of Abu Dhabi 1,274 Dec-12 570 Dec-12 

Rasmala Holdings Limited 920 Jan-13 348 Dec-12 

EFG-Hermes Emirates 773 Nov-12 243 Nov-12 

Schroders Investment Management 650 Dec-12 250 Dec-12 

Abu Dhabi Commercial Bank** 642 2011 155 Jun-12 

Mashreq Capital 320 Dec-12 130 Dec-12 

ING Investments ME 300 Dec-12 41 Jun-12 

First Gulf Bank 242 Dec-12 242 Dec-12 

Shuaa AM 231 2011 59 Jun-12 

Commercial Bank of Dubai 192 Dec-12 123 Dec-12 

Arqaam Capital AM 112 Dec-12 112 Dec-12 

Al Mal Capital 76 Dec-12 - Dec-12 

Source: Companies, Lipper, a Thomson Reuters company 

*Fiduciary data from annual report *Rasmala manages a number of funds on behalf of other 

entities which is included in overall assets under management; funds figure is for Rasmala 

sponsored funds only was US$ 91 million as of June 2012***ADCB Asset Management 

presentation cited AuM of US$ +500 million; figure above includes other fiduciary activity 

330


Top Local Fund Sponsor Companies* 


Top Companies by Number of Funds 

CBD 

6.1% 

ADIC 

6.1% 

Al Mal 

5.1% 

Mashreq 

8.2% 

ENBD 

13.3% 

Shuaa 

5.1% Dam an 

4.1% 

NBAD 

16.3% 

Others 

35.7% 

Top Companies by Fund Assets 

ADCB 

6.2% 

ADIC 

6.7% 

FGB 

9.7% 

Mashreq 

5.0% 

NBAD 

14.1% 

Arqaam 

4.4% 

Others 

25.8% 

ENBD 

28.0% 


*Excludes fund management activities of foreign financial institutions; Excludes 

funds managed by Rasmala for other entities; Dubai Shariah Asset Management 

Ltd – a joint venture between Dubai Commodities Asset Management (a division of 

Dubai Multi Commodities Centre Authority- DMCCA) and Shariah Capital – has 

some third party managed funds. The bulk of this was an investment by DMCCA 

as a seed investor. 

This chapter provides data for a select number of regional and international entities 

which manage funds from the UAE. According to data for selected asset managers, 

there were 108 funds (not counting different classes separately) sponsored by these 

entities as of end-2012. Of these, 26 were sharia compliant funds. Data for the assets of 

these funds are not fully complete, but asset aggregation for funds that have published 

their size comes to US$ 2.98 billion. Characteristics of these funds are provided below to 

the extent permitted by severely limited data availability. There were 45 locally domiciled 

funds (with assets under management of US$ 1.1 billion) in the United Arab Emirates, of 

which 10 were sharia compliant (with assets of US$ 145 million). There were 21 funds 

(with assets under management of US$ 704 million) that indicated the UAE as its 

geographic focus. There also a large number of third party foreign funds that asset 

managers also market which are not covered in this section (DIFC data are covered). 

331


Fund Industry Breakdown by Selected Fund Managers* 

(millions of U.S. dollars where relevant, June 2012) 

Company* Number of Funds Open Fund 

Sharia Total Ended Assets 

Abu Dhabi Commercial Bank** - 3 3 155 

ADIC Investment Management PPC*** - 6 6 169 

Al Hilal Bank 2 2 2 31 

Al Mal Capital PSC 1 5 5 23 

Al Masah Capital Limited - 1 1 - 

Arqaam Capital Limited - 2 2 111 

Commercial Bank of Dubai 1 6 5 72.6 

Daman Investments 1 4 4 - 

Dubai Islamic Bank**** 6 6 - - 

Dubai Shariah Asset Management***** 3 3 3 78 

Duet MENA Ltd - 2 2 90 

EFG Hermes Emirates - 4 4 243 

ENBD Asset Management 7 13 13 702 

FFA Capital - 1 1 1 

First Gulf Bank - 2 2 242 

Franklin Templeton Investments - 1 1 23 

Gulfmena Investments Ltd 1 3 3 45 

ING Investment Middle East - 1 1 41 

Majid Al Futtaim Asset Management^ - 1 1 2 

Mashreq Capital 1 8 8 125 

MENA Capital International - 1 1 11.9 

National Bank of Abu Dhabi^^ 2 16 16 352 

Rasmala Investment Bank Ltd^^^ 1 4 4 91 

Royal Capital PJSC - 2 2 32 

Schroders Investment Management Ltd - 1 1 181 

Shuaa Capital^^^^ 2 5 5 59 

The National Investor - 4 4 70 

Union National Bank 1 2 2 20 

Source: Lipper, a Thomson Reuters company * based on local presence 

*More recent fund data are presented for some sponsors in the first table. June data are 

retained above for comparison. This list may not be comprehensive and is compiled on the 

basis of selected fund managers. **Excludes ADCB Macquarie Infrastructure fund and Zones 

Corp Infrastructure fund ***Includes Libya Fund which has seed capital, but is not currently 

offered to investors ****DIB Capital has 6 funds, but data were only available for GCC Islamic 

equity fund with assets of US$ 18.6mn *****Appear to be third party funds; note that third party 

funds offered by other companies is not necessarily included in this table. Abu Dhabi Islamic 

Bank offers NCB capital funds Êlite MENA Equity fund closed in June 2012. ^Încludes third 

party funds; NBAD real estate investment trust (REIT) not included ^^^Rasmala manages 

funds for ABC Bank and Export Development Bank in Egypt, but these are excluded here. 

^^^^Saudi subsidiary of Shuaa Capital included in the figures. 

332


Breakdown of Funds by Category – Conventional versus Sharia Compliant 

(fund asset breakdown based on incomplete data as of June 2012) 



Shariah 

Compliant 

749 

25% 

Shariah 

Compliant 

25.0% 

Conventional 

2,225 

75% 

Conventional 

75.0% 

Source: Source: Lipper, a Thomson Reuters company 

Breakdown by Base Currency 




Other 

33 

1% 

AED 

749 

25% 

Other 

4.8% 

AED 

25.0% 

USD 

2,225 

74% 

USD 

70.2% 


333


Breakdown by Objective 




Capital 

Preservation 

193 

7% 

Income/Grow th 

80 

3% 

Income 

712 

25% 

Income/Growth 

8.9% 

Capital 

Preservation 

5.9% 

Income 

17.8% 

Grow th 

1,807 

65% 

Growth 

67.3% 


Breakdown by Fund Type 




Other 

957 

32% 

Money 

Market 

98 

3% 

Fixed 

Income 

447 

15% 

Equity 

1,473 

50% 

Money 

Market 

3.8% 

Fixed 

Income 

16.3% 

Other 

17.3% 

Equity 

62.5% 


334


Recent Fund Launches 

Fund Company Type Domicile 

Invest AD - MENA Bond ADIC Investment Mgmt Fixed Income UAE 

Al Hilal Global Sukuk Al Hilal Bank Fixed Income UAE 

Arqaam Value Fund Arqaam Capital Equity Cayman 

Duet MENA Horizon Duet MENA Ltd Equity Cayman 

NBAD Balanced 

Allocation 

National Bank of Abu Dhabi Fund of Funds UAE 

NBAD Conservative 

Allocation 

National Bank of Abu Dhabi Fund of Funds UAE 

NBAD Growth Allocation National Bank of Abu Dhabi Fund of Funds UAE 

NBAD Sukuk Income National Bank of Abu Dhabi Fixed Income UAE 

NBAD Cautious Income National Bank of Abu Dhabi Fixed Income UAE 

NBAD Real Estate 

Investment Fund (CEIC) 

National Bank of Abu Dhabi Other UAE- DIFC 

Source: Company Websites, Lipper, a Thomson Reuters company 

*ADIC Investment Management redomiciled a number of funds; not presented here. 

Recent Fund Closures 

Fund Company Type Domicile 

Invest AD - MENA Dynamic ADIC Investment Mgmt Equity UAE 

DSAM Kauthar Natural 

Cayman 

Dubai Shariah AM Other 

Resources 

Islands 

Al Dana Emerging Markets Commercial Bank of 

Equity 

Dubai 

Fund of Funds UAE 

Al Dana Sharia Compliant 

MENA Equity Manager 

Selection 


Dubai Fund of Funds UAE 

Al Dana Sharia Compliant 

Global Equity Manager 

Selection 


Dubai Fund of Funds UAE 

Rasmala Global Equity 

Cayman 

Rasmala Investment Equity 

Opportunity 

Islands 

Rasmala Islamic Global Equity 

Rasmala Investment Fixed Income Cayman 

Opportunity 

Rasmala Hedge Fund 

Cayman 

Rasmala Investment Hedge Funds 

Strategies 

Islands 

Rasmala Islamic MENA Equity 

Cayman 

Rasmala Investment Fund of Funds 

Opportunity 

Islands 

Rasmala MENA Equity 

Cayman 

Rasmala Investment Fund of Funds 

Opportunity 

Islands 

Al Tawfeek Gulf Equity SHUAA Capital Equity Bahrain 

TNI Mena Real Estate Active The National Investor Sector Bermuda 


335


Dubai International Financial Centre (DIFC) 

Assets under management by companies based in DIFC amounted to US$ 8.6 

billion (+21% from 2011) at the end of September 2012. Domestic fund assets stood 

at US$ 309 million and foreign fund assets stood at US$ 2.4 billion. Assets under 

management in portfolios amounted to US$ 5.9 billion. Two public funds and seven 

exempt funds are currently domiciled in DIFC. In 2011, there were 1,807 funds being 

marketed in or through the DIFC by 54 fund promoters. Of these, 1,381 were designated, 

334 were in the ‘other foreign fund criteria’ category (formerly titled ‘non-designated’). In 

2010, DFSA introduced two additional categories including recommendation based 

offers and the equivalent of the DFSA exempt fund criteria. In 2011, 61 funds were 

marketed in the DIFC under the first of these and the latter enabled the marketing of 28 

funds. The remaining 3 funds marketed in 2011 were domestic. Designated funds are 

those where the fund is established and operated in a recognised jurisdiction as per 

DFSA's notice and the fund is a designated fund as specified in the notice. Other Foreign 

Fund Criteria captures those funds not able to meet the above criteria, but where the 

custody and investment management activities are undertaken by entities acceptable to 

DFSA e.g. based and regulated in a recognised jurisdiction. Following the introduction of 

a new Exempt Funds regime in 2010, existing Private Funds had to convert to either 

Public or Exempt Funds by the end of a transitional period in July 2012. 

Assets Under Management at DIFC 

(US$ billion, end of period) 

Fund Assets Portfolios Total 

Institutional Clients 

Discretionary 

High Net Worth & 

Private Accounts 

Foreign Funds 

DIFC Funds 

2011 - - - - 7.1 

Sep-2012 0.309 2.4 4.1 1.8 8.6 

Source: DFSA 

336


Fund Managers and Promotion at DIFC 

(end of period) 

Number of Number of Foreign 

Funds 

Fund Managers 

Fund Promoters 

Designated 

Other Foreign Fund Criteria 

Recommendation Based Offer 

Exempt Fund Criteria 

Number of Domestic Funds Marketed 

Total 


Funds 

Established 

in DIFC 

2007 7 - - - - - - - - - - 

2008 9 47 1,035 603 - - 5 1,643 4 2 - 

2009 9 52 1,137 553 - - 2 1,692 2 4 - 

2010 13 56 1,143 386 185 12 5 1,731 2 4 1 

2011 13 54 1,381 334 61 28 3 1,807 2 - 5 

2012** 14 - - - - - - - 2 - 7 

Source: DFSA *Funds in the private category moved to exempt category with 

the end of the transition period in 2011. ** 2012 data were yet to be released. 

Public 

Private 

Exempt* 

337


Focus: Industry Perspective 

Financial Services Association UAE 

The Financial Services Association UAE (FSA-UAE) was registered in the UAE on 

October 21st 2010 and started its operations in January 2012. The creation of the 

Association was driven by the combination of a rapid expansion of the industry - whereby 

the size of the financial services sector doubled within five years – and the significant 

changes in the regulatory framework that followed the market correction which resulted 

from the effects of the global financial crisis on the UAE economy. These factors 

accelerated the need to offer the financial firms a structured platform which would allow 

them to coordinate among themselves and channel their regulatory dialogue with the 

three financial regulators in the UAE. 

The creation of the Association was initiated by Arwa Hamdieh. After several discussions 

with Financial Services firms, an initial group of 12 firms and banks, which supported the 

Association, formed the first board of directors. Today, the Association has over 30 firms 

among its membership pool and continues to grow. The full list of members is available 

at the end of this article. 

The mandate of the Association is: “To develop an independent and effective 

representative body for the Financial Services sector in the UAE and open a dialogue 

with regulators and other Government entities on important issues relevant to the growth 

and sustainability of the industry”. The mission of the Association is: “To participate in 

developing a healthy, growing, efficient, sustainable and profitable Financial Services 

industry which complies with standards of International best practice”. 

The Association will focus on the following four areas: 

Policy Development Initiatives 

Best Practice Initiatives 

Market Development Initiatives 

Regulatory Research & Awareness Initiatives 

338


The first successful policy development initiative for the Association was coordinating the 

dialogue with the Securities & Commodities Authority (SCA) and the Asset Management 

industry in the UAE on Mutual Fund Regulation which was issued in February 2011. This 

was soon followed by supporting market participants during the first year of 

implementation of this new regulation. The Association has also initiated policy 

development efforts in its own domain and advocated the need to draft an appropriate 

regulatory framework to govern trade associations as the current legal framework is 

more intended for charitable organisations. The new non-profit law for DIFC licensed 

entities was released on December 23 rd , 2012. The member firms of the FSA have 

supported the transformation of the corporate structure to comply with the new law. In 

addition, the Association is preparing for a best practice initiative championing the 

development of a voluntary code of conduct for independent financial advisors and 

wealth managers. The Association hopes to have this endorsed by the Regulator on 

completion. Several other initiatives are under development and will soon be announced 

as the Association unveils its strategy for 2013. 

The Association, just as any newly formed trade body, will have a challenging task 

ahead of it. Entering a market which does not have a history of having trade 

associations, this will impose an educational challenge for the Association on both the 

market and the regulators side. The firms have traditionally relied on their individual 

relationships with the regulators and Government officials, and some might resist 

opening up and sharing part of the dialogue and relationship management they posses 

with the regulators with a trade body. On the regulator’s side, a trade association is a 

new dimension in the market and finding an effective way to conduct the policy 

development work within a reasonable timeframe might seem like an ambitious task at 

times. Another challenge for the Association will be developing a policy agenda which 

accommodates the needs of its varied and diverse membership base. 

As part of the Association’s mission to make trade associations an integral part of the 

UAE’s development, the Association intends to develop a training program for interested 

Emirati professionals in policy development. This should improve the standards within 

the public affairs and public policy divisions within the UAE community. 

339


MEMBERS: 

National Bank of Abu Dhabi I Invest AD I The National Investor I UBS AG I 

Fidelity Worldwide Investment s I Franklin Templeton Investments IING 

Investment Management I Allfunds Bank I Skandia International I Deloitte 

I Clifford Chance I Habib Al Mulla & Company I INVESCO Asset 

Management I RBC Investor Services I Arendt & Medernach I Barclays 

Bank I HSBC Securities Services UAE I T. Rowe Price I Aviva Investors I 

Morningstar I Norton Rose I Robeco I Mondial Dubai I Zurich International 

I Apex Fund Services I Brooklands Pensions I Amundi Asset Management I 

Bloomberg I Schroder Investment Management I ACUMA I Emirates NBD 

Bank I Standard Life I 

Fund Trends 

In 2012H1, UAE domiciled fund assets in the dataset rose by 19% from end-2011. 

Overall funds in the dataset saw net inflows of US$ 176 million, with net inflows of US$ 

95 million to fixed income funds and US$ 65 million to equity funds. In 2011, funds 

tracked in the dataset saw assets rise by 5% and had net inflows of US$ 65 million. 

Top UAE Funds of Selected Sponsors by Assets 

(millions of U.S. dollars, June 2012 except where indicated otherwise) 


1 Emirates Real Estate Fund Other Emirates NBD Asset Mgmt 215 

2 Schroder Int’l Selection ME Equity Schroder Invest. Mgmt. 181 

3 MENA Opportunities Fund Hedge EFG Hermes Emirates 145* 

4 Al Saqer Fund Hedge First Gulf Bank 139** 

5 FGCM FoF First Gulf Bank 103** 

6 NBAD Cautious Income Fund Bond National Bank of Abu Dhabi 93 

7 Emirates MENA Top Companies Equity Emirates NBD Asset Mgmt 91 

8 NBAD UAE Trading Fund Equity National Bank of Abu Dhabi 86 

9 Duet MENA Opportunities Fund Equity Duet MENA Ltd 85 

10 Emirates Islamic Money Market 

Money 

Market 

Emirates NBD Asset Mgmt 82 

11 Invest AD - UAE Total Return Index ADIC Investment Mgmt 80 

12 Al Dana GCC Income Fund Bond Commercial Bank of Dubai 78** 

13 EFG Hermes MEDA Fund Equity EFG Hermes Emirates 77^ 

14 Al Nokhitha Fund Equity Abu Dhabi Commercial Bank 76 

15 Emirates MENA Fixed Income Bond Emirates NBD Asset Mgmt 68 

16 NBAD UAE Distribution Fund Other National Bank of Abu Dhabi 67 

Source: Companies, Lipper Rankings, Lipper, a Thomson Reuters company 

AuM data for * Nov-12, **Dec-12 Ôct-12 

340


Top 10 UAE Domiciled Funds by Assets 



1 Al Saqer Hedge Fund First Gulf Bank 139* 

2 NBAD Cautious Income Fixed Income National Bank of Abu Dhabi 93 

3 NBAD UAE Trading Fund Equity National Bank of Abu Dhabi 86 

Invest AD - UAE Total 

4 

Return 

Index Invest AD 80 

5 Al Dana GCC Income Fund Fixed Income Commercial Bank of Dubai 78* 

6 Al Nokhitha Fund Equity Abu Dhabi Commercial Bank 76 

7 NBAD UAE Distribution Fund Other National Bank of Abu Dhabi 67 


9 Mashreq Al Islami Income Sukuk Mashreq Capital 38 

10 TNI UAE Blue Chip Fund Equity The National Investor 35 

Source: Companies, Lipper Rankings, Lipper, a Thomson Reuters company *AuM 

for Dec-12 

341

United Arab Emirates - Directory 

Oman 

Name Phone Internet E-mail Address 

Abu Dhabi Commercial 


ADIC Investment 

Management PPC 

00971 2-696-2222 www.adcb.ae contact@adcb.ae 

009712-692 6101 www.investad.com 

clientservices@investad.com 

Al Hilal Bank 00971 2-499-4444 www.alhilalbank.ae marketing@alhilalbank.ae 

Al Mal Capital 00971 4-360-1111 

www.almalsecurities.co 

m 

www.almalcapital.com 

Arqaam Capital 00971 4-507-1700 www.arqaamcapital.com info@arqaamcapital.com 


Dubai 

00971 4-211-2700 www.cbd.ae cbd-ho@cbd.ae 

Abu Dhabi Commercial 

Bank Building, Al Salam 

Street, Box 939, Abu 

Dhabi, United Arab 

Emirates 

National Bank of Abu 

Dhabi building, Khalidiya, 

Tariq Bin Ziad Street, P.O. 

Box 46309, Abu Dhabi, 


Sheikh Sultan Bin Khalifa 

Building, 1st-3rd Floor, 

Corniche Road, P.O. Box 

63111, Abu Dhabi, United 

Arab Emirates 

Building Number 4, 3rd 

Floor, Office 302, Burj 

Khalifa Square, P.O. Box 

119930, Dubai , United 

Arab Emirates 

The Gate Village, Building 

Number 5, Level 4, Dubai 

International Financial 

Center, P.O. Box 506687, 

Dubai , United Arab 

Emirates 

Commercial Bank of Dubai 

Building, Al Ittihad Street, 

Port Saeed Area, P.O. Box 

2668, Dubai , United Arab 

Emirates 

342


Oman 

Daman Investments 00971 4-332-4140 www.daman.ae info@daman.ae 

Dubai Shariah Asset 


00971 4-367- 8384 www.dmcc.ae 

customercare@dmcc.ae 

Duet Mena LTD 00971 4-237-9201 www.duetgroup.net info@duetgroup.net 

EFG Hermes UAE 00971 4-363-4000 www.efg-hermes.com amsales@efg-hermes.com 



00971 4-370-0022 

www.emiratesnbd.com/a 

ssetmanagement/ 

assetmanagement@emirates 

nbd.com 

FFA Capital Ltd. 00971 4-363-7470 

www.ffaprivatebank.com 

/FFA-Fixed-Income- 

MENA-Fund.html 

ffadubai@ffaprivatebank.com 

Dubai World Trade Center, 

Suite 600, Sheikh Zayed 

Road, P.O. Box 9436, 

Dubai 

Jumeirah Lakes Towers, 

Almas Tower, Sheikh 

Zayed Road, PO Box 

48800, Dubai, United Arab 

Emirates 

Currency House Building, 

4th Floor, Office 10, 

Sheikh Zayed Road, Dubai 


Centre, P.O. Box 482011, 


Emirates 

The Gate Building, Level 6, 

West Wing, Dubai 




Emirates 

The Gate Building, Level 8, 

Dubai International 

Financial Center, P.O. Box 


Arab Emirates 

Gate Village 7, Level 1, 

Office 103, Dubai 



343


Oman 


Investment 

00971 4-428 4100 

www.franklintempletong 

em.com 

info@franklintempleton.com 

Gulfmena Investments 

Limited 

00971 4-323-1234 www.gulfmena.com clientservices@gulfmena.com 

+971 4 372-0803 www.ingim-me.com sales@ingim-me.com 

Makaseb Funds Company 00971 4-207-8396 

www.mashreqassetman 

agement.com 

contact@makaseb.com 

Mashreq Capital (DIFC) 

Limited 

00971 4-207-8823 www.mashreqbank.com mcrelations@mashreqbank.c 

om 


Abu Dhabi 

+971 2 611-1111 www.nbad.com 

customersupport@nbad 

.com 

Dubai, UAE 

The Gate, East Wing, 

Level 2, Dubai 


Centre, P.O.Box 506613, 

Dubai, United Arab 

Emirates 

Gate Village 5, Level 3, 

Office Number 5, Dubai 

Int’l Financial Center, Box 


Arab Emirates 

9 th Floor, Al Fattan 

Currency House, DIFC 

PO Box 506679 Dubai, 


Mashreqbank Building, 7 th 

Floor, Al Ghurair City, P.O. 

Box 1250, Dubai , United 

Arab Emirates 

Mashreq Bank Building, 

7th Floor, Omar Bin Al 

Khattab Street, Deira Area, 

P.O. Box 1250, Dubai , 


NBAD Tower, Sheikh 

Khalifa Street, P.O. 

Box 2993, Abu Dhabi , 


344


Oman 

Rasmala Investment Bank 

Limited 

00971 4-363-5600 www.rasmala.com info@rasmala.com 

Royal Capital PJSC 00971 2-659-4300 www.royalcapital.ae amq@royalcapital.ae 

SHUAA Capital 00971 4-330-3600 www.shuaacapital.com info@shuaacapital.com 

The National Investor 00971 2-619-2300 www.tni.ae info@tni.ae 

Unifund Capital 

Investment 

00971 2-626-2888 no website yet 

tareq.rahhal@unifundcapital. 

ae 

Union National Bank 00971 2-674-1600 www.unb.ae customercare@unb.co.ae 

Gate Village, Building 

Number 10, Level 1, Dubai 




Emirates 

Royal Capital PJSC, 

Tawam Tower 1, Khalifa 

Street, P.O. Box 53883, 

Abu Dhabi, United Arab 

Emirates 

Emirates Towers, 28 th 

Floor, Sheikh Zayed Road, 

P.O. Box 31045, Dubai , 


The National Investor 

Tower, 2nd Floor, Zayed 

the First Street, Khalidiya 

Area, P.O. Box 47435, Abu 

Dhabi , United Arab 

Emirates 

Millenium Tower, 17 th 

Floor, Hamdan Street, 

Corniche Area, 43469, 

UAE 

Union National Bank 

Building, Al Salam Street, 

Tourist Club Area, P.O. 

Box 3865, Abu Dhabi , 


345

346

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