AL Mal UAE Equity Fund — Fund Information / Factsheet 2018

Nov 15, 2018

Al Mal MENA Equity Fact Sheet NAV Per Unit: USD 8.44

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October 2018

	Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Inception Date 15th June 2008 Fund Size USD 30 million Strategy Size USD 93 million Fund Registration Bahrain Currency USD Subscription Weekly Min Subscription USD 250,000 Bloomberg Code MALMENE BI Reuters Code LP65123002 Management Fee 1.75% Subscription Fee Up to 3% Redemption Weekly Benchmark Index S&P Pan Arab Composite Fund Type Open Ended Administrator Apex Custodian Standard Chartered Auditors Deloitte Fund Objective:The objective of the Fund is to achieve significant capital appreciation, primarily through investment in equity and equity related securities in the Middle East and North African markets. Key Terms:	Performance Fund Benchmark Relative Perf.
		YTD 2018 1.7% 8.0% -6.3% 2017 17.8% 1.3% 16.5% 2016 -3.7% 4.1% -7.8% 2015 -12.5% -17.6% 5.1% 2014 -0.7% -1.5% 0.8% 2013 31.1% 18.9% 12.2% 2012 6.6% 2.6% 4.0% 2011 -8.8% -15.1% 6.3% 2010 15.7% 13.9% 1.8% 2009 17.7% 12.7% 5.0% 2008 -47.5% -49.9% 2.4% Since Inc. -9.3% -38.3% 29.0%
		Performance1 Fund Benchmark2 Relative Perf.
		1 Month -3.0% 0.5% -3.5% YTD 1.7% 8.0% -6.3% 1 Year 2.7% 9.1% -6.4% 3 Years 13.9% 8.2% 5.7% 5 Year 4.5% -4.4% 8.9% Since Inc.* -9.3% -38.3% 29.0%

Performance

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Al Mal MENA Equity Fund S&P Pan Arab Composite Index (Rebased)
12.0
10.0
8.0
6.0
4.0
Jun-08 Aug-08Oct-08 Dec-08 Feb-09 Apr-09Jun-09 Aug-09Oct-09 Dec-09 Feb-10 Apr-10Jun-10 Aug-10Oct-10 Dec-10 Feb-11 Apr-11Jun-11 Aug-11Oct-11 Dec-11 Feb-12 Apr-12Jun-12 Aug-12Oct-12 Dec-12 Feb-13 Apr-13Jun-13 Aug-13Oct-13 Dec-13 Feb-14 Apr-14Jun-14 Aug-14Oct-14 Dec-14 Feb-15 Apr-15Jun-15 Aug-15Oct-15 Dec-15 Feb-16 Apr-16Jun-16 Aug-16Oct-16 Dec-16 Feb-17 Apr-17Jun-17 Aug-17Oct-17 Dec-17 Feb-18 Apr-18Jun-18 Aug-18Oct-18
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• As of the last Wednesday of every month (31 of October 2018) Source: Al Mal internal performance measurement based on reports from third-party administrators (Apex)

1 Performance is net of fees; 3-year and 5-year return is cumulative

2S&P Pan Arab Composite Index

Al Mal MENA Equity Fact Sheet

NAV Per Unit: USD 8.44

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October 2018

Fund Manager Commentary:

October was a dreadful month for Global Equities. The S&P 500 in the US fell 6.7% & the MSCI Emerging Market Index recorded an 8.6% decline. Brent Crude closed at 75.5, down -7% for the period. In that context, the MENA region proved to be exceptionally resilient, ending the month in positive territory (+0.5%). Qatar was the star performer again with its 5.9% gain, driven by a 12% rise in the market capitalization of Qatar National Bank. For the year so far, the Qatari Exchange Index has a total return of 27.4%.

Egypt continued to be under severe pressure, losing another 9.3% last month after the 7.7% loss of September. Not surprisingly, our fund did not escape from the bloodbath in the market. As highlighted in the previous month’s factsheet, we see the fundamental case for our holdings intact and we thus resisted against panic selling in such an indiscriminate market environment.

Our Fund’s performance was also hurt by a negative development for one particular company - Alujain Corporation in Saudi Arabia. Fire broke out at one of its factory units in the industrial city of Yanbu, resulting in stoppage of production. Our interaction with the management and other channel checks suggest that all damages would be covered by insurance and the company should also be compensated for lost production as per the business interruption clause. Regardless, the stock lost 25% and contributed heavily to the negative alpha. It now trades at an EV/ton of SR 7,200 vs SAR 14,200 for the most direct competitor. We thus we see it as a deep value pick in the sector.

	Top Portfolio Holdings	% of Fund
	Al Rajhi Bank	8.3
	Dana Gas	6.3
	SABIC	6.1
	Qalaa Holding	4.8
	Humansoft Holding Total # of Holdings	4.4 32

Source: Al Mal internal performance measurement based on reports from third-party administrators (Apex)

	Fund Characteristics2	Fund	Benchmark
	Standard Deviation	14.5%	14.6%
	Sharpe Ratio	-0.15	-0.27
	Beta	0.89	-
	Tracking Error	6.7%
	Information Ratio	0.27

2 Calculated using 5-year weekly data

Saudi Arabia posted a sharp decline in fiscal deficit for the third quarter. Earlier in the month, the finance ministry released a prebudget statement for the first time ever. The Minister said they expect the Kingdom’s GDP, which contracted in 2017, to expand by 2.3% next year. We see this statement as a further step in the direction to enhance disclosures and transparency and this should be welcomed by investors. It is also a clear message to the private sector that the government is willing to support economic growth.

Geographic Allocation

Sector Allocation

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Energy
Qatar
Services
Kuwait Cash
Insurance
Cash
Others
UAE Real Estate
Telecoms
Egypt
Industrial
Saudi Arabia Banks
0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60%
Benchmark Fund Benchmark Fund
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Disclaimer

None of the information and opinions contained herein is intendedto form the basis for any investment or trading decision, and no specific recommendations are intended. The products and transactions described herein are not suitable for every investor. Such products and transactions are only suitable for sophisticatedandknowledgeable professional users of financial instruments, and are structured and customizedto the needs and objectives of each investor. The information andopinions contained herein have been prepared for informational purposes only and do not constitute an offer to sell, or solicitation of an offer to purchase, any security, any commodity futures contractor commodity-related product, any derivative product, or any trading strategy or service described herein. Neither Al Mal Capital PSC nor any of its affiliates, directors, authorizedmanagers and/or employees accepts liability for any loss arising from the use of or makes any representation as to the accuracy or completeness of the terms and conditions of products and transactions described herein. Finalizedterms and conditions are subject to further discussion and negotiation, and will be determinedin part on the basis of pricing and valuation models, data, and assumptions that are proprietary to Al Mal Capital and its affiliates. No assurance can be given that a product or transaction can, in fact, be executed on any representative terms indicated herein.

Al Mal UAE Equity Fact Sheet

NAV Per Unit: AED 1.26

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October 2018

October 2018
Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Inception Date 5th April 2006 Fund Registration UAE Currency AED Fund Size AED 30mn Subscription Weekly Dividend Frequency Yearly Min Subscription AED 100,000 Management Fee 1.50% Performance Fee 20% over 10% hurdle with high watermark Subscription Fee Up to 2% Redemption Weekly Benchmark Index S&P UAE Composite Index Fund Type Open Ended Administrator Standard Chartered Custodian Standard Chartered Financial Year End 31st December Auditors Deloitte Fund Objective: The Al Mal UAE Equity Fund’s objective is to achieve medium to long-term capital growth by investing primarily in equities listed on the UAE Exchange. Key Terms:	Performance1 Fund Benchmark2 Relative Perf. Performance Yearly Fund Benchmark Relative Perf. YTD 2018 1.7% -2.2% 3.9% 2017 7.8% -1.6% 9.4% 2016 7.9% 9.0% -1.1% 2015 -15.3% -17.6% 2.3% 2014 11.2% 7.5% 3.7% 2013 81.4% 88.0% -6.6% 2012 28.7% 23.5% 5.2% 2011 -18.4% -17.7% -0.7% 2010 -1.0% -8.8% 7.8% 2009 31.2% 24.6% 6.6% 2008 -56.9% -69.4% 12.5% 2007 50.4% 54.8% -4.4% 2006 -19.1% -35.2% 16.1% Since Inc. 40.8% -40.0% 80.8%
	1 Month -1.4% 0.4% -1.8% YTD 1.7% -2.2% 3.9% 1 Year -4.3% -9.2% 5.0% 3 Years 13.1% -1.7% 14.8% 5 Year 25.6% 5.4% 20.2% Since Inc.* 40.8% -40.0% 80.8%

Performance

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Al Mal UAE Equity Fund S&P UAE Index (Rebased)
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Apr-06May-06Jul-06Aug-06Oct-06Dec-06Jan-07Mar-07May-07Jun-07Aug-07Sep-07Nov-07Jan-08Feb-08Apr-08May-08Jul-08Sep-08Oct-08Dec-08Jan-09Mar-09May-09Jun-09Aug-09Sep-09Nov-09Jan-10Feb-10Apr-10Jun-10Jul-10Sep-10Oct-10Dec-10Feb-11Mar-11May-11Jul-11Aug-11Oct-11Nov-11Jan-12Mar-12Apr-12Jun-12Aug-12Sep-12Nov-12Dec-12Feb-13Apr-13May-13Jul-13Aug-13Oct-13Dec-13Jan-14Mar-14Apr-14Jun-14Aug-14Sep-14Nov-14Dec-14Feb-15Apr-15May-15Jul-15Sep-15Oct-15Dec-15Jan-16Mar-16May-16Jun-16Aug-16Sep-16Nov-16Jan-17Feb-17Apr-17May-17Jul-17Sep-17Oct-17Dec-17Jan-18Mar-18May-18Jun-18Aug-18Oct-18
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• As of the last Wednesday of every month (31 of October, 2018) Source: Al Mal internal performance measurement based on reports from third-party administrators (Standard Chartered Bank)

1 Performance is net of fees; 3-year and 5-year return is cumulative

2S&P Pan Arab Composite Index

Al Mal UAE Equity Fact Sheet

NAV Per Unit: AED 1.26

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October 2018

Fund Manager Commentary:

After having strongly underperformed the Abu Dhabi index so far this year, the Dubai index is slowly starting to fill the gap, with a 1% outperformance in October. The Al Mal UAE Equity Fund return (- 1.4%) was impacted by the 11% decline (on low volumes) of Orascom Construction (listed in Nasdaq Dubai) – which has been under pressure recently due its exposure to Egypt.

Emirates NBD reported a good set of third quarter results. Net income rose 15% y/y boosted by expansion of net interest margins. The loan book grew 2.6% over just the last 3 months driven by public sector lending, construction and trade. With a RoE of 17% and a price-book ratio of 0.9x, valuation looks attractive.

Some interesting data came out of the Dubai Statistics Center (DSC). As per them, in the 12 months ending September 2018, the Emirate’s resident population increased by 7.7% to 3.1m. The growth is somewhat counter intuitive to anecdotal evidence of a slowdown. Additionally, the population of non-resident workers and temporary residents stood at 1.16m therefore implying as much as 37% of Dubai's active daytime population coming from outside the emirate. We continue to closely monitor various data points that together help to better understand how the economy is functioning and heading to.

	Top Portfolio Holdings	% of Fund
	First Abu Dhabi Bank	13.9
	Emaar Properties	10.9
	Emirates NBD	10.4
	Total # of Holdings	11

Source: Al Mal internal performance measurement based on reports from third-party administrators (Apex)

	Fund Characteristics2	Fund	Benchmark
	Standard Deviation	19.7%	21.8%
	Sharpe Ratio	0.08	-0.09
	Beta	0.87
	Tracking Error	5.7%
	Information Ratio	0.53

2 Calculated using 5-year weekly data

As per real estate consultant Chestertons, an additional 10k units are set to be delivered this year in Dubai and a further 70k before Expo 2020. This will continue to exert downward pressure on prices which have fell 3% in the most recent quarter, despite several positive initiatives being announced by the UAE Government, including the newly announced retirement visa, company ownership and 10-year residency. We don’t see the market to be in equilibrium anytime soon and thus continue to underweight the sector, at least for the time being.

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Geographic Allocation Sector Allocation
Cash Cash
Healthcare
Other
Other
Nasdaq
Transport
Dubai
Real Estate
Abu Dhabi Banks
0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40%
Benchmark Fund Benchmark Fund
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Disclaimer

None of the information and opinions contained herein is intendedto form the basis for any investment or trading decision, and no specific recommendations are intended. The products and transactions described herein are not suitable for every investor. Such products and transactions are only suitable for sophisticatedandknowledgeable professional users of financial instruments, and are structured and customizedto the needs and objectives of each investor. The information andopinions contained herein have been prepared for informational purposes only and do not constitute an offer to sell, or solicitation of an offer to purchase, any security, any commodity futures contractor commodity-related product, any derivative product, or any trading strategy or service described herein. Neither Al Mal Capital PSC nor any of its affiliates, directors, authorizedmanagers and/or employees accepts liability for any loss arising from the use of or makes any representation as to the accuracy or completeness of the terms and conditions of products and transactions described herein. Finalizedterms and conditions are subject to further discussion and negotiation, and will be determinedin part on the basis of pricing and valuation models, data, and assumptions that are proprietary to Al Mal Capital and its affiliates. No assurance can be given that a product or transaction can, in fact, be executed on any representative terms indicated herein.