AL Mal UAE Equity Fund — Fund Information / Factsheet 2018

Oct 15, 2018

Al Mal MENA Equity Fact Sheet

NAV Per Unit: USD 8.70

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September 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:	Performance1 Fund Benchmark2 Relative Perf. 1 Month -4.5% -1.7% -2.8% YTD 4.8% 7.5% -2.7% 1 Year 10.4% 6.4% 4.1% 3 Years 12.8% 3.9% 8.8% 5 Year 8.8% -2.8% 11.6% Since Inc. -6.5% -38.6% 32.1% Performance Fund Benchmark Relative Perf. YTD 2018 4.8% 7.5% -2.7% 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.* -6.5% -38.6% 32.1%

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-08Aug-08Oct-08 Dec-08 Feb-09 Apr-09Jun-09Aug-09Oct-09 Dec-09 Feb-10 Apr-10Jun-10Aug-10Oct-10 Dec-10 Feb-11 Apr-11Jun-11Aug-11Oct-11 Dec-11 Feb-12 Apr-12Jun-12Aug-12Oct-12 Dec-12 Feb-13 Apr-13Jun-13Aug-13Oct-13 Dec-13 Feb-14 Apr-14Jun-14Aug-14Oct-14 Dec-14 Feb-15 Apr-15Jun-15Aug-15Oct-15 Dec-15 Feb-16 Apr-16Jun-16Aug-16Oct-16 Dec-16 Feb-17 Apr-17Jun-17Aug-17Oct-17 Dec-17 Feb-18 Apr-18Jun-18Aug-18
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• As of the last Wednesday of every month (26 of September 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 8.70

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September 2018

Fund Manager Commentary:

Continuing the trend from last month, equity markets in the MENA region fell in September, although we saw some recovery in the last week of the month. Egypt sold off brutally -7.7% on the back of the turmoil which is taking place in global emerging markets. Saudi Arabia and Dubai also had a challenging month but the rest of the Gulf was more resilient.

Our Egypt exposure had a negative contribution to the performance of the fund. Egypt was a strong positive contributor to performance last year but while we have been substantially lowering our exposure to this country since June (from a high of 25% to 15%), the portfolio has inevitably been impacted by the volatility in the EGX. For instance, Orascom Development - a play on the tourism recovery - declined 19% last month although there was no adverse material development for this company. On the contrary, we expect Orascom to benefit from a weakening currency as it would attract more tourists to the country. Indeed, almost 80% of the revenues are in USD and there is very limited exposure to local demand. It is however worth highlighting that most of our allocation to Egypt is through one stock – EK Holding. The stock is denominated in US dollar, held mainly by institutional investors (as opposed to retail investors for most Egyptian stocks) and most of its revenues are generated in US dollars.

	Top Portfolio Holdings	% of Fund
	Al Rajhi Bank	8.5
	Saudi Kayan EK Holding	7.1 5.1
	Alujain Corp	5.0
	BUDGET Saudi	4.7
	Total # of Holdings	26

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

	Fund Characteristics2 Standard Deviation	Fund 14.4%	Benchmark 14.5%
	Sharpe Ratio	-0.09	-0.25
	Beta	0.89	-
	Tracking Error	6.6%
	Information Ratio	0.34

2 Calculated using 5-year weekly data

The other reason for the underperformance of our portfolio is the price decline of some of our core holdings – i.e stocks we consider as long-term holdings and on which we keep some exposure in the portfolio even when valuation seem full. For instance, DP World has lost almost 20% of its value over the last two months on global trade jitters. As a reminder, we see these businesses as run by highly efficient management who are capable to positively surprise the market in many ways.

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Geographic Allocation Sector Allocation
Qatar Energy
Services
Kuwait
Cash
Other Insurance
Others
Cash
Transportation
Real Estate
UAE
Telecoms
Egypt Industrial
Banks
Saudi Arabia
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 sophisticated and knowledgeable professional users of financial instruments, and are structured and customized to the needs and objectives of each investor. The information and opinions 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, authorized managers 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. Finalized terms and conditions are subject to further discussion and negotiation, and will be determined in 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 1.28

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September 2018

	Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Inception Date 5th April 2006 Fund Registration UAE Currency AED Fund Size AED 32mn 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. 1 Month -4.3% -1.3% -3.0% YTD 3.1% -2.6% 5.7% 1 Year 0.3% -7.1% 7.4% 3 Years 8.1% -8.7% 16.9% 5 Year 27.9% 5.3% 22.6% Since Inc. 42.8% -40.2% 83.0% Performance Yearly Fund Benchmark Relative Perf. YTD 2018 3.1% -2.6% 5.7% 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.* 42.8% -40.2% 83.0%

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-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18
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• As of the last Wednesday of every month (26 of September, 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 1.28

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September 2018

Fund Manager Commentary:

The S&P UAE Index recorded a decline of 1.3% last month. The announcement of the potential merger between three banks in Abu Dhabi – ADCB, UNB & Al Hilal Bank – helped the ADX to once again outperform its DFM neighbor. Year to date, the return differential between the two markets now stands at a staggering 30 percentage points.

Our core holdings - NMC Healthcare & DP World – each fell 10% in September. NMC - which is listed on London stock exchange - mainly sold off due to global investors offloading their most liquid emerging markets related holdings. We remain positive on this story as we believe that current valuations do not reflect the strong 30% CAGR in earnings growth we expect for the coming 3 years driven by higher utilization of current facilities. The partnership with GOSI in Saudi Arabia is creating the second largest private healthcare player in the Kingdom (by beds capacity) and will benefit from economies of scale which are expected to unlock considerable synergies.

	Top Portfolio Holdings	% of Fund
	First Abu Dhabi Bank	14.6
	Emirates NBD	10.4
	Emaar Properties	10.4
	Total # of Holdings	11

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

	Fund Characteristics2 Standard Deviation	Fund 19.7%	Benchmark 21.8%
	Sharpe Ratio	0.10	-0.09
	Beta	0.87
	Tracking Error	5.6%
	Information Ratio	0.61

2 Calculated using 5-year weekly data

In case of DP World, the Government of Djibouti ordered the nationalization of the Doreleh Container Terminal, a joint venture operated by DP World until February when the government seized the terminal. We spoke to the IR Director and understood the company will continue to pursue all legal means to defend its rights as a shareholder. On the positive side, the company is in various stages of conversation with at least five state governments in India about ‘major logistics facilities’. DP world is looking at opportunities beyond sea ports such as river ports and transportation, freight corridors, port-led special economic zones, inland container terminal and logistics infrastructure, including cold storage.

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Geographic Allocation Sector Allocation
Cash
Cash
Healthcare
Other
Other
Nasdaq
Transport
Dubai Real Estate
Banks
Abu Dhabi
0% 10% 20% 30% 40%
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 sophisticated and knowledgeable professional users of financial instruments, and are structured and customized to the needs and objectives of each investor. The information and opinions 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, authorized managers 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. Finalized terms and conditions are subject to further discussion and negotiation, and will be determined in 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.