|26 March, 2019

INTERVIEW: Daman Investments to launch two new funds

First fund will be launched this year with an initial size of $10-15 mln, and a target size of $150 mln

Arabic business couple working together on project. Image for illustrative purposes only.

Arabic business couple working together on project. Image for illustrative purposes only.

Getty Images/Jasmin Merdan

Dubai-based Daman Investments is launching two new funds, with the first targeting conventional investors and the second being offered to those seeking shariah-compliant investments, the company’s head of asset management has told Zawya.

“We have new investment strategies we are trying to implement. We are targeting conventional and shariah-compliant investors,” Ali El Adou, head of asset management at Daman Investments told Zawya in an interview at the company’s office last week.

Daman Investments said in November last year that it was developing a new investment strategy targeting institutional investors, which would see it wind down three old funds ahead of the launch of its first new fund this year. (Read more here).

The last recorded data to the end of March 2018 for the wound-down funds, showed that the Daman Speculator Fund’s net asset value had declined by about 66 percent since its launch 10 years ago, and the net asset value of the Daman Islamic Fund had dropped in value by around 35 percent since its formation 16 years ago, according to Eikon data.

“All legacy funds have been closed in line with Emirates SCA regulations. The transition was smooth and straightforward,” El Adou said.

Balanced fund

Daman Investments expects to launch the new fund, called the Mena fund, this year, El Adou said, adding that it had been working with regulators in Luxembourg on its launch

“We want our funds to be domiciled in high regulated jurisdictions. We see Luxembourg as one of the best-regulated fund jurisdictions globally. We are offering our clients a highly regulated product offering,” he added.

The Mena fund will be a balanced fund, covering both fixed income and equities according to El Adou, and the fund’s targeted investor base are conventional investors who focus on MENA markets, in addition to Turkey and Pakistan.

“We have a lineup of seed investors and the fund’s initial size is expected (to be) between $10-15 million, with a target size of $150 million,” he said.

The total assets under management for mutual funds with a focus on GCC countries stands at $27.9 billion currently, with money market (trade finance) accounting for 63.9 percent of these assets, according to Raghu Mandagolathur, an analyst at Marmore. Marmore is a subsidiary of Kuwait Financial Centre, Markaz.

However, he told Zawya by email that he expected this to grow.

“Investment in various asset classes is set to get more institutionalised in the GCC region,” he said.

Mandagolathur argued that positive developments in the capital market space, such as the inclusion of country indices into international benchmarks and the development of debt capital markets are expected to improve the amount of assets under management in GCC-focused funds going forward.

JP Morgan has recently included sovereign bonds and sukuk from Saudi Arabia, the UAE, Bahrain, Kuwait and Qatar into its JP Morgan Emerging Market Bond Index (which already includes Oman). (Read more here)

Saudi Arabia’s stock market has recently been upgraded to secondary emerging market status by FTSE Russell and S&P Dow Jones, and is set to join MSCI’s emerging market indices in June. (Read more here).

 Shariah-compliant offering

In 2020, Daman Investments is expecting to launch a new fund, targeting shariah-compliant investors.

“We are going to expand our product offering to cover shariah-compliant investment strategies next year,“ El Adou told Zawya.

“In parallel, we are growing our Discretionary Mandates business. We are offering our investors tailored investment mandates depending on each client’s risk profile,” El Adou added.

A discretionary mandate is a product for investors who wish to delegate their investment decisions to dedicated managers. Clients define their risk level, time horizon and specific needs together with the manager, who then makes investment choices on their behalf.

“All our investment products, whether funds or mandates, are highly regulated and we implement the industry’s best standards in terms of risk management and compliance. Daman Investments’ objective is to safeguard the clients’ investments and generate for them high risk-adjusted returns,” he said.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(Gerard.aoun@refinitiv.com)

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© ZAWYA 2019