AL Mal UAE Equity Fund — Fund Information / Factsheet 2019

Jul 7, 2019

Al Mal MENA Equity Fact Sheet NAV Per Unit: USD 9.16

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June 2019

Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Inception Date 15th June 2008 Fund Size USD 25 million Strategy Size USD 80 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 1 Month YTD 1 Year 3 Years 5 Year Since Inc. Performance 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Since Inc.*	Fund Benchmark Relative Perf.
	7.5% 8.0% -0.5% 2.6% 6.8% -4.1% 17.8% 1.3% 16.5% -3.7% 4.1% -7.8% -12.5% -17.6% 5.1% -0.7% -1.5% 0.8% 31.1% 18.9% 12.2% 6.6% 2.6% 4.0% -8.8% -15.1% 6.3% 15.7% 13.9% 1.8% 17.7% 12.7% 5.0% -47.5% -49.9% 2.4% -1.6% -34.1% 32.5%
	1 Fund Benchmark2 Relative Perf.
	1.7% 2.8% -1.2% 7.5% 8.0% -0.5% -0.3% 5.3% -5.6% 29.7% 25.1% 4.6% -2.3% -12.2% 10.0% -1.6% -34.1% 32.5%

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 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 Jun-18 Oct-18 Feb-19 Jun-19
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• As of 26 of Jun 2019

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 9.16

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June 2019

Fund Manager Commentary:

Global equity markets bounced back strongly in June after last month pullback. US stocks jumped 6.3% while the MSCI Emerging Markets Index added 4.7%. In this context MENA underperformed with a gain of 2.8% partly explained by the 4.2% decline in Oil prices. Qatar was the best performer with a 4.9% gain as investors rotated out of Saudi Arabia and Kuwait.

Portfolio holding eXtra closed a securitization deal worth SAR 166mn of its installment sales’ receivables portfolio. The cash inflow from the transaction will be utilized for repayment of debt, thereby reflecting positively on their financial indicators and on its future credit rating. It also has the effect of discounting the future net income to the present; Q2 will see a gain of 17mn which otherwise would have been recorded in subsequent quarters. It is important to note that as of Q1 the receivables portfolio was worth SAR 377mn with a bad debts ratio of 3%.

Orascom Development in Egypt renegotiated lower the cost of some of its debt. The transaction involves repayment of EGP 650mn by June 2019, while lenders agreed to reduce the borrowing cost on foreign currency debt by 100bps. This will decrease the company’s weighted average cost of debt to 9.3% from 10.5% and result in annual savings of EGP70mn in interest payments this year and a total of EGP320mn over a six-year period (2019-24). The amendment puts the company’s balance sheet in a stronger position with bulk of the debt (>80%) in FCYdenomination. The interest expense savings for 2019 roughly adds 10% to net income estimate.

	Top Portfolio Holdings	% of Fund
	Al Rajhi Bank	6.2
	National Bank of Kuwait	5.8
	Qatar National Bank	5.8
	Saudi Basic Industries Corp	4.4
	Samba Financial Group	3.8
	Total # of Holdings	39

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

	Fund Characteristics2	Fund	Benchmark
	Standard Deviation	14.6%	14.9%
	Sharpe Ratio	-0.24	-0.38
	Beta	0.88
	Tracking Error	6.7%
	Information Ratio	0.33

2 Calculated using 5-year weekly data

In Saudi Arabia, the government launched an Exports Stimulus Program. As part of the National Industrial Development and Logistics Program, the new initiative supports national exporters to expand into international markets and increase their competitiveness, in line with Vision 2030, which aims to increase the contribution of non-oil exports to the Kingdom’s non-oil GDP from 16% to 50%. The incentives range from SAR20,000 to SAR255,000, at various coverage limits based on the activity.

Geographic Allocation

Sector Allocation

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Cash Cash
Others
Other
Consumer Staples
Egypt
Industrials
United Arab Emirates Real Estate
Telecom
Kuwait
Materials
Qatar
Consumer Discretionary
Saudi Arabia Financials
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.

NAV Per Unit: AED 1.23

Al Mal UAE Equity Fact Sheet

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June 2019

	June 2019
	Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Inception Date 5th April 2006 Fund Registration UAE Currency AED Fund Size AED 38mn 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. 2019 5.6% -0.7% 6.3% 2018 -5.7% -7.7% 2.0% 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. 37.9% -43.7% 81.6%
		1 Month 0.2% 0.6% -0.5% YTD 5.6% -0.7% 6.3% 1 Year -2.2% -2.2% -0.1% 3 Years 13.5% -5.1% 18.6% 5 Year -9.1% -27.3% 18.3% Since Inc.* 37.9% -43.7% 81.6%

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 Dec-18 Apr-19
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• As of 26 of Jun 2019

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 UAE Composite Index

Al Mal UAE Equity Fact Sheet

NAV Per Unit: AED 1.23

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June 2019

Fund Manager Commentary:

The S&P UAE Index was up 0.6% last month. Both Abu Dhabi and Dubai Indices fared better, but the Index performance was dragged lower by the -7% decline in DP World, which is listed on Nasdaq Dubai.

Aldar, the property developer from Abu Dhabi had a very good month, adding ~10% in price gain. The company launched a residential community exclusively for UAE nationals. Alreeman 2 is a AED1.7bn project spread across an area of 2.4mn sqm resulting in 1690 villa plots, and follows the success of Alreeman launched in January. It has so far this year generated off-plan sales worth AED 2.4bn, compared to 2.6bn for the full year 2018 . Moreover, the company has finalized a lease agreement with Apparel Group, a fashion and lifestyle retail conglomerate, for 23 stores, covering over 100,000 sq ft of retail space across three malls - Yas Mall, The Mall at WTCAD and Al Jimi Mall. We like the company on several counts- expected benefits of the Emaar JV, consolidation of TDIC assets and a potential divestment of recurring business could be catalysts.

	Top Portfolio Holdings	% of Fund
	Emirates NBD	11.4
	Dubai Islamic Bank	10.5
	EMAAR Properties	9.0
	Total # of Holdings	13

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

	Fund Characteristics2 Standard Deviation	Fund 19.1%	Benchmark 20.8%
	Sharpe Ratio	-0.26	-0.44
	Beta	0.87
	Tracking Error	6.4%
	Information Ratio	0.62

With the objective to boost the economy, the UAE government made two new announcements – first, expat executives would also be eligible for the gold card. The applicants should have a bachelor's degree, at least five years of experience in the country and a monthly salary of not less than AED 30,000. Secondly, Abu Dhabi will guarantee 75% of loan amount to SMEs in order to open up more avenues of financing for the cash-strapped sector. AED 9bn has been set aside and the package will be open to both Emirati and expatriateowned businesses in the emirate, with revenues as low as AED15mn and up to AED250mn.

2 Calculated using 5-year weekly data

The PMI figure for UAE at 59.4 is encouraging. Strong market demand along with the start of new projects contributed to this increase. However, it is important to note that output growth has come on back of heavy ‘price discounting’, which is not sustainable.

Geographic Allocation

Sector Allocation

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Cash Cash
Other
Other
Energy
Nasdaq Industrials
Telecom
Dubai
Real Estate
Abu Dhabi
Financials
0% 10% 20% 30% 40% 50% 60%
0% 10% 20% 30% 40% 50%
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.