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Dec 07 2011

Shari'ah compliant funds of funds sector analysis

By John Foster 30 November 2011

This week we analyze the Shari'ah compliant fund of funds sector, as compiled by Zawya Investor.

Although Zawya only covers Middle East-based funds, the sector is popular especially in Saudi Arabia, where 22 of the 24 funds listed are domiciled. The other two funds are from Kuwait and Bahrain respectively.

Marketed as an investment one-stop shop, multi-manager funds first came to light in the 1980s but became more prominent as an investment model in the 1990s. They are a very popular optionamongst both retail and institutional investors in the US and UK. The funds aredesigned to make an investor's life easier by bringing together a range of specialist managers into a single fund.

There are two types of multi-manager funds: those that invest in a range of other funds controlled by different asset managers, which are called funds of funds, and those that appointexternal managers with specific expertise to invest separate tranches of theprovider's portfolio; these are called manager of managers funds.

The funds we deal with this week arefunds of funds. Although the majority of funds covered have Saudi Arabia astheir focus (54.2%), there is also a lot of interest in global Shari'ahcompliant funds-of-funds (41.7%).

Top performer is the $15.2m Al-Rajhi Multi Asset Conservative fund, managed by Mohammed Ishaq Ali of Al RajhiCapital. It was the only positive performer either over the three months to November 28, or year to date. The next best performers over three months with adead zero return were the $4.1m Al Yusr Aman Multi Asset fund and the $7.1m Al Yusr Mizan Multi Asset fund, both managed by Saudi Hollandi Capital and both focused on Saudi Arabian equity funds.

However, propping up the wrong end ofthe table was another Saudi Hollandi offering, the $0.7m Al Yusr Global Emerging Markets Equity fund, which returned -9.6% over three months and -18.3%YTD to November 30.



© The Islamic Globe 2011

© Copyright Zawya. All Rights Reserved.


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