Blue chip bonanza

zoom

HAYECK: The fund is the best option to access UAE equities as an asset class.

Walid Hayeck, principal fund manager, talks us through The National Investor's UAE Blue Chip Fund.

What is the name of your fund?

The TNI UAE Blue Chip Fund (TNI BCF).

Is it focused on any particular sectors, and what is its strategy?

TNI BCF is an open-ended fund that aims to achieve long-term capital appreciation through investing in equity securities publicly traded, primarily in the UAE, and, to a lesser extent, in other GCC markets. Although the fund may participate in markets throughout the GCC, its investments will be primarily focused on publicly traded equities of UAE firms with large capitalisation, which present a steady and recurrent track record of earnings growth and have a potential for capital appreciation.

The key investment criteria are the company's financial strengths, competitiveness, profitability, growth prospects and the quality of management. The investment process is based on fundamental research and will incorporate a blend of top-down and a bottom-up analytical approach.

Where is the fund domiciled, and why?

TNI BCF is an open-ended investment trust fund established in the United Arab Emirates, as recognized by resolution No. 164//8/94 of the Board of Directors of the UAE Central Bank. This has entitled TNI BCF the status of a UAE national which provides access to all GCC-listed securities which may be restricted to foreign ownership.

Does it use an external administrator or custodian?

TNI's self imposed compliance guidelines dictate the systematic appointment of external administrators and custodians for all of its investment trust funds. Our locally regulated funds are currently serviced by Gulf Clearing Company, an independent custodian and administrator based in Bahrain. For all offshore incorporated funds, the global custodian is HSBC Fund Services Ltd and the administrator is Apex Fund Services Ltd - Bermuda.

What do you use as a benchmark for the fund, and how has it performed in comparison?

TNI BCF's performance is benchmarked against the MSCI UAE index. The fund has outperformed the index by more than 35% since its inception in May 2005, with a significantly lower volatility (details of performance to date are as of May 08, 2005).

What is the minimum subscription, and what kind of investor does the fund target?

Minimum subscription is set at AED1 million (US$300,000). Units of the fund are designed for sophisticated high net worth and institutional investors who are able to understand the risks involved in emerging markets' equity investments, particularly in GCC equities.

When is the NAV calculated?

NAV is calculated on a weekly basis every Thursday.

When can investors enter or exit the fund?

Investors can subscribe to and redeem from units of the fund on a weekly basis at the NAV of the last business day of each week, subject to a one year lock-up period.

What management fees are payable?

TNI shall receive a management fee payable monthly in arrears and calculated at an annualised rate of 2% of the net asset value of the Fund. TNI shall also receive a performance fee, payable monthly in arrears on the basis of NAV per unit, at a rate equal to 15% of the amount by which the annualised rate of return achieved by the fund exceeds one month EIBOR plus 4% per annum. The performance fee is subject to a high watermark.

What advantages does your fund have over other similar funds?

TNI BCF is the best performing fund in the UAE equity market, on a both risk-adjusted and absolute return basis. The fund has outperformed its benchmark by more than 35% with a volatility of 18% against an index volatility of 27%. Therefore the fund represents the best available option to access the UAE equities as an asset class.

This out-performance has been achieved thanks to a disciplined investment management approach and a rigorous process mainly relying on fundamental research. Out-performance can be attributed to a successful asset allocation between the UAE and using GCC opportunistic trading, pre-IPO and IPO investing as well as cash management, as satellite portfolios.

Print | Email | Discuss this article |

READERS' COMMENTS

View all comments (0)

Have your say

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM