Access to Islamic Hedge Funds - Incisive Media

fund profile
of the most experienced managers
in this asset class.
Investing exclusively in units of
the Tocqueville Gold Focus Fund,
the DSAM Kauthar Gold Fund is a
sub-trust of the Al Safi Trust managed
by Tocqueville Asset Management.
The fund’s return reflects
the performance of the Tocqueville
Gold Focus Fund.
The Tocqueville Gold Focus Fund
aims to produce positive, absolute
long-term returns using both long
and short strategies in gold and precious
metal equities. It will invest
primarily in the shares of precious
metal producers. Short selling of
equities will be used as a defensive
strategy to dampen the volatility of
gold prices.
Tocqueville Asset Management
is a US-based limited partnership
registered as an investment advisor
with the US Securities and Exchange
Commission. It is the investment
manager to the Tocqueville Gold
Focus Fund and to registered investment
companies, private funds and
separately managed accounts.
Tocqueville has been in the asset
management business since 1990.
At June 30, 2008 Tocqueville had
over $6.5 billion in assets under
management.
John Hathaway, managing
director, a portfolio manager and
a member of both the investment
committee and the executive committee
of Tocqueville, has primary
responsibility for management of
the fund’s portfolio. Hathaway has
38 years of experience in the investment
business, including the last 10
years with Tocqueville Asset Management.
Hathaway manages discretionary
concentrated portfolios for individual
and institutional clients.
As an analyst he is responsible for
researching the natural resources
sector and special situations.
Fund investment strategy
Tocqueville usually invests the
majority of its net assets in gold
and securities of companies located
throughout the world that are
engaged in mining or processing
gold. A proportion of the fund’s
total assets may be invested directly
in gold bullion.
The investment strategy of the
gold fund is value orientated and
contrarian. The fund invests in
companies with good long-term
business fundamentals that are temporarily
out of favour with investors
so have a market value lower
than their intrinsic value. Fundamental
research-based value orientation
helps the portfolio manager
find companies that have good businesses.
The contrarian orientation
enables the fund to buy these companies
at attractive prices.
Value orientated means the portfolio
manager looks for companies
that are selling at a discount to their
intrinsic value and where business
fundamentals are improving or
expected to improve. In assessing
intrinsic value, the portfolio manager’s
judgements are based on a
comparison of a company’s stock
market value with various financial
parameters, including historical and
projected cash flow, book earnings
and net asset value.
Generally the fund looks for
companies that are characterised
by strong management, business
franchise, competitive position and
financial structure, a clear strategy,
free cash flow, large insider ownership
and shareholder-orientated
policies. Contrarian means the fund
is looking for investment opportunities
in stocks and sectors that are
out of favour with investors.
Stocks are considered out of
favour when the price has declined
significantly or has lagged the relevant
market index for an extended
period of time and the consensus
Name of fund:
Management company:
Portfolio manager:
Contact:
Domicile:
Asset manager:
Fund summary:
among investors is not expected to
improve. Investment ideas come
from identifying companies where
stock prices are down or have lagged
the market. By analysing the quality
of the business franchise and longterm
fundamentals, the fund can
make a judgement about the company’s
intrinsic value. With a company
with strong long-term business
fundamentals, the fund can wait
for them to fall out of favour with
investors in order to buy them at a
discount to intrinsic value.
The fund sells stocks when they
are no longer considered to be good
value.
Gold is particularly good if an
investor wants to diversify its portfolio
or wants an investment that
may provide protection against
inflation or currency devaluation,
as long as they are also willing to
accept the additional risks associated
with investment in gold and
gold-related securities.
Middle East opportunity
Hathaway sees inclusion on the platform
as a real plus for his company
and the fund. Not only were the
majority of the fund’s deals already
largely Shariah compliant, his aversion
to leverage and debt made his
fundamentals of dsam kauthar gold fund
investment philosophy an ideal
match for the Al Safi platform.
Although the fund is starting with
the seed capital of $50 million, Hathaway
is confident he will be able to
grow this to $500 million over a twoyear
period. “We have the capacity
to manage that sort of money and
we believe we are going to be talking
to investors who are already convinced
of the attractions of gold,”
says Hathaway. Although he would
have been wary of approaching
investors in the Middle East without
the support of DSAM and Shariah
Capital, he is confident the fund will
be attractive to regional investors.
Speaking about tailoring the fund
to be Shariah compliant, Hathaway
says trading is little different for
him. The Shariah Capital screening
criteria are easily accommodated
and the eligible universe of Shariah
compliant companies allows him to
manage the DSAM Kauthar Gold
Fund suimilar to the Tocqueville
Fund strategy. He expects Shariah
to be an important part of what
Tocqueville does in the future, too,
and forecasts that the company
could be looking at a quarter of its
investors coming from the Middle
East and wanting products like the
DSAM Kauthar Gold Fund. n
DSAM Kauthar Gold Fund
Tocqueville Asset Management
John Hathaway
Mohammad Jamjoum, general manager, Dubai Shariah Asset Management, Dubai
Multi Commodities Centre, Al Mas Tower, 50th Floor, Jumeirah Lakes Towers, Dubai,
United Arab Emirates (+971 4375 2227; mjamjoum@shariahcap.com)
Cayman Islands
Dubai Shariah Asset Management (DSAM)
Offers a disciplined exposure to gold and precious metals equities investing
exclusively in units of the Tocqueville Gold Focus Fund, a sub-trust of the Al Safi Trust
managed by Tocqueville Asset Management. The Tocqueville Gold Focus Fund aims
to produce positive, absolute long-term returns using long and short strategies in
gold and precious metal equities, investing primarily in the shares of precious metal
producers. It engages in the short selling of such equities as a defensive strategy to
dampen the volatility of gold prices.
Asset manager fee: 1%
Minimum investment: $5 million
Subscriptions:
monthly
Liquidity:
quarterly, with 30 days’ prior written notice, subject to a 3% redemption fee in the
first 12 months
Auditor:
PricewaterhouseCoopers
Administrator:
Citco Fund Services
Prime broker and custodian: Barclays Capital Shariah advisor: Shariah Capital
Shariah compliance:
The Shariah Supervisory Board of the Al Safi Trust Platform consists of Sheikh Nizam
Yaquby (Bahrain), Mohamed Daud Bakar (Malaysia), Mohammad Abdul Rahim Sultan
Al Olama (Dubai) and Shaykh Yusuf Talal DeLorenzo (US), the board’s executive
representative and Shariah advisor to the fund.
www.hedgefundsreview.com November 2008 | Access to Islamic Hedge Funds Supplement | 19