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ISSA: The Muscat and Oryx funds are among the few in the GCC region to be rated by Standard & Poor's.

AbdulRazak Ali Issa, chief executive of BankMuscat, outlines a selection of the diverse range of funds offered by the bank's successful asset management division.

What are the names of your funds?

BankMuscat currently manages three leading mutual funds: the Muscat Fund, investing in companies listed on the Muscat Securities Market, which is rated A by Standard & Poor's; the Oryx Fund, investing in companies listed on GCC markets, which is rated AA by Standard & Poor's; and the BankMuscat MSCI Kuwait Fund, which is an index tracker, tracking the MSCI Kuwait index.

When were they launched and what have been their performances to date?

The Muscat Fund was launched in 1995. The fund has returned 411% in the past five years. The Oryx Fund was launched in 1994 and returned 289% in the past five years. The BankMuscat MSCI Kuwait Fund was launched in October 2006 and has returned 41.4% since inception.

Where are the funds domiciled?

The Muscat Fund and Oryx Fund are domiciled in the Sultanate of Oman, and the BankMuscat MSCI Kuwait Fund is domiciled in the Kingdom of Bahrain.

Do you use an external administrator?

The administration is done by BankMuscat. On the other hand, for the BankMuscat MSCI Kuwait Fund, custody and administration is provided by Gulf Clearing House.

When do you calculate the NAV?

The net asset value for all of the funds is calculated daily.

When are investors allowed to enter or exit the funds?

All of our funds are open-ended so you can enter or exit daily.

How do you benchmark the performance of these funds?

For the Muscat Fund, we use the MSM 30 index as a benchmark; for the Oryx Fund, we use an equally weighted GCC index; and the BankMuscat MSCI Kuwait Fund tracks the MSCI Kuwait index. Over the past five years, the Muscat Fund has returned 411% compared to 372% for the benchmark, and the Oryx Fund has returned 289% compared to 281% for the benchmark.

What is the minimum subscription and what kind of investor do you target?

Both the Muscat Fund and the Oryx Fund are denominated in Omani Rials and the minimum subscription on both is OMR100. The BankMuscat MSCI Kuwait Fund is a US dollar fund and has a minimum subscription of US$2,000.

Our funds are open to individuals and to domestic and international institutions who are looking for exposure to the Omani, GCC or Kuwaiti markets, which have been some of the best performing markets.

Over other similar funds available?

Firstly, both the Muscat Fund and the Oryx Fund are rated by Standard & Poor's. The funds offer daily liquidity, the management fees are comparable to international funds, we have a track record of over 10 years and the fund management team is highly experienced.

What management fees are payable?

The Muscat Fund has a total management fee of 1.25% per annum, the Oryx Fund has a total management fund of 1.85% per annum, and the MSCI Kuwait Fund has a total management fee of 0.85% per annum.

The fund management fees are among the lowest when compared with other funds in the region and there are no performance fees.

What advantages do your funds have? Are there any challenges involved with managing these funds?

Yes there are, but we have been able to generate consistent returns for our customers, even during volatile conditions such as 2006. In 2006, our Oryx Fund delivered an 8.4% return when most of the regional markets were down more than 50%.

This was achieved through careful selection of stocks based on our investment philosophy. The main challenge is to identify the stocks which will be able to sustain the volatilities, and we have a proven track record in the past.

What are your views on the outlook for these funds?

We are very bullish on the GCC region. The earnings growth for the companies in our funds continues to be strong, backed by an improving macro-outlook. We see companies reporting earnings growth of 20 to 25% per annum for the next two years.

The markets are attractively valued relative to other emerging markets and have low correlation to global markets.

The GCC markets have low levels of institutional and foreign ownership and we expect a significant rise in foreign fund inflows. We are research-driven and will continue to invest in stocks that have good value. This, we feel, will make us outperform the market.

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