AL Mal UAE Equity Fund — Fund Information / Factsheet 2021

Jan 6, 2021

AZ Al Mal MENA Equity Fact Sheet December 2020 NAV Per Unit: USD 5.22

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Fund Manager Commentary

Investor sentiment remained bullish in December over vaccine optimism that can help normalize the global economic environment in 2021 as inoculation grows. This was inspite of the emergence of a new variant of Covid-19, which triggered a new wave of lockdowns extending into the first quarter of 2021, delaying the anticipated recovery. Despite a steep drop in global equities in March, many mature markets recovered most of their losses by year-end 2020, with the US hitting new all-time highs. The S&P 500 returned 3.8% over December, while the DOW returned 3.4% over the month. Emerging market indices outperformed over December as investors rotated into the space, pushing the MSCI Emerging Markets Index up 7.3% in December. The S&P Pan Arab MENA index however lagged both emerging and global indices, up only 0.9%. Gold rebounded after a poor November, rising 6.5% in December, while crude also regained momentum, up 6%. Finally, December’s best performing asset class was Bitcoin,, rising 50% in the month alone, and concluding 2020 at the 29,000 mark.

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Objective

Achieve capital appreciation, primarily through investment in equity and equity related securities in the Middle East and North African markets.

Fund Performance

			Fund Performance
	Performance1	Fund	Benchmark2	Alpha
	1 Month	2.6%	1.6%	1.1%
	YTD3 1 Year 3 Year	5.1% 4.7% 13.0%	-1.8% -2.2% 10.2%	6.9% 6.9% 2.7%
	5 Year	46.5%	30.1%	16.4%
	Since Inc.	4.4%	-2.7%	7.0%

1 Performance is net of fees; return is cumulative

Tadawul lagged the S&P Pan Arab index in December, falling 0.6%, with financials weighing on the index’s poor performance most. Mid-December saw Saudi and Qatar work towards ending a rift that divided the Gulf Arab region for more than three years, with the Qatari foreign minister hoping “things would move in the right direction” while his Saudi counterpart tweeted he was “looking forward to a successful outcome to Gulf reconciliation talks”. The two nations’ efforts, along with Kuwait and the US’s mediation clearly bore fruit with the borders between the two countries reopening, at the time of writing. Saudi also reported an economic contraction of 4.6% over Q3 2020 with the oil sector contributing more to the contraction vs. the non-oil sector. Going into 2021, we remain cautiously optimistic on Saudi, with upside risks emanating from an accelerated recovery in economic activity as the vaccine rolls out Q1, though we see downside risks from near-term demand shocks from the pandemic coupled with austerity measures that dampen consumer spending.

The EGX30 also lagged the S&P Pan Arab Index, down 0.9% over the month. We remain overweight Egypt going into 2021, despite a difficult 2020 as the country offers more structural growth and economic diversification than the GCC. Meanwhile, The World Bank, through the International Finance Corporation (IFC), is in talks with the Egyptian Sovereign Wealth Fund (SWF) to partner on a number of projects that the Fund is offering to the private sector for investment, according to Walid Labadi, IFC Country Manager for Egypt, Libya and Yemen. He also indicated that the IFC spent a total of USD 307mn in Egypt during FY19/20, with the total market expenditure of the IFC surpassing USD 4 billion, the highest in MENA. Portfolio holding MM Group for Industry and International trade’s BoD agreed to participate in the capital increase of Ebtikar (its 49.9 per cent JV held by B Investments Holding) with EGP15mn, raising their overall contribution to Ebtikar to EGP365mn. In addition, the BoD approved the acquisition of 49.9 per cent of the non-banking financial services company Basata Financial Holding for EGP30mn. The company remains a portfolio favorite and this news is a milestone in the company’s vision to unlock value from both it’s e-payments and its non-banking financial services arms.

Kuwait’s prime minister appointed a cabinet that included new faces at the oil and finance ministries, days after voters demanding change removed half the nation’s parliament. Khalifa Hamada, who served as finance minister undersecretary for more than a decade, became the fifth person to hold the post in just seven years, while Mohammed Alfares, board member of Kuwait Pertroleum, became the country’s eighth energy minister in as many years. Finally, on a portfolio level, Humansoft announced the resignation of its CEO, Mayank Baxi. The BoD appointed Georges El Yahchouchi, the President of the company’s American University of Middle East (AUM), as the new CEO, March 2021. We see little impact on the business’s operations and continue to remain confident in its ability to drive sustainable returns well-over the cost of capital, and capacity to reinstate dividends offering attractive yields.

2 S&P Pan Arab Composite Index

3 As of 30th December 2020

	1Performance is net of fees; return is cumulative 2S&P Pan Arab Composite Index 3As of 30thDecember 2020 5 Year 46.5% Since Inc. 4.4%	30.1% -2.7%	16.4% 7.0%
	Holding	Top 5 Holdings	% of Fund
	Al Rajhi Bank Mouwasat Medical Services		5.2 4.9
	Humansoft Holdings		4.3
	MM Group for Industry and Trade		3.9
	National Commercial Bank		3.6
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	13.3%	15.0%
	Sharpe Ratio Beta Tracking Error	0.12 0.8 6.1%	0.0
	No. of Holdings	47

4 The fund characteristics are based on the historical data of the Al Mal MENA Equity Fund as the AZ Al Mal Equity Fund continues to follow the same strategy; calculatedusing 3-year weekly data

		Fund Information
	Investment Manager	Azimut (DIFC) Limited
	Investment Advisers Fund Manager	Al Mal Capital PJSC Sherif El Haddad
	Inception Date Fund Size	June 26, 2019 USD 57 million
	Strategy Size	USD 250 million
	Domicile Currency	Luxembourg USD
	Subscription & Redemption	Weekly
	Min Subscription Bloomberg Code	USD 1 (Retail) -250,000 (Institutional) AZ3AZUA LX
	Management Fee Benchmark Index Fund Type	Up to 2.0% S&P Pan Arab Composite Open Ended
	Administrator & Custodian	BNP Paribas

Sector Allocation

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Utilities, 3% Communication Services, 5% Others, 6%
Financials, 40%
Consumer Staples, 6%
Real Estate, 8%
Materials, 6%
Health Care, 12% Consumer Discretionary, 14%
Geographic Allocation
United Arab Emirates, 11%
Others, 6% Saudi Arabia, 43%
Qatar, 11%
Kuwait, 9%
Egypt, 20%
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Disclaimer

10Y Fund Strategy Performance

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Al Mal MENA Equity Fund
20 S&P Pan Arab Composite Index (Rebased)
AZ Al Mal Equity Fund
18
16
14
12
10
8
6
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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None ofthe information andopinions containedherein is intendedto form the basis for any investment or trading decision, andno specific recommendations are intended. The products andtransactions describedherein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeable professionalusers of financialinstruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have beenprepared 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 describedherein. Neither AlMalCapital 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 MENA Equity Fact Sheet December 2020

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NAV Per Unit: USD 8.95

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Fund Manager Commentary

Investor sentiment remained bullish in December over vaccine optimism that can help normalize the global economic environment in 2021 as inoculation grows. This was inspite of the emergence of a new variant of Covid-19, which triggered a new wave of lockdowns extending into the first quarter of 2021, delaying the anticipated recovery. Despite a steep drop in global equities in March, many mature markets recovered most of their losses by year-end 2020, with the US hitting new all-time highs. The S&P 500 returned 3.8% over December, while the DOW returned 3.4% over the month. Emerging market indices outperformed over December as investors rotated into the space, pushing the MSCI Emerging Markets Index up 7.3% in December. The S&P Pan Arab MENA index however lagged both emerging and global indices, up only 0.9%. Gold rebounded after a poor November, rising 6.5% in December, while crude also regained momentum, up 6%. Finally, December’s best performing asset class was Bitcoin,, rising 50% in the month alone, and concluding 2020 at the 29,000 mark.

Tadawul lagged the S&P Pan Arab index in December, falling 0.6%, with financials weighing on the index’s poor performance most. Mid-December saw Saudi and Qatar work towards ending a rift that divided the Gulf Arab region for more than three years, with the Qatari foreign minister hoping “things would move in the right direction” while his Saudi counterpart tweeted he was “looking forward to a successful outcome to Gulf reconciliation talks”. The two nations’ efforts, along with Kuwait and the US’s mediation clearly bore fruit with the borders between the two countries reopening, at the time of writing. Saudi also reported an economic contraction of 4.6% over Q3 2020 with the oil sector contributing more to the contraction vs. the non-oil sector. Going into 2021, we remain cautiously optimistic on Saudi, with upside risks emanating from an accelerated recovery in economic activity as the vaccine rolls out Q1, though we see downside risks from near-term demand shocks from the pandemic coupled with austerity measures that dampen consumer spending.

The EGX30 also lagged the S&P Pan Arab Index, down 0.9% over the month. We remain overweight Egypt going into 2021, despite a difficult 2020 as the country offers more structural growth and economic diversification than the GCC. Meanwhile, The World Bank, through the International Finance Corporation (IFC), is in talks with the Egyptian Sovereign Wealth Fund (SWF) to partner on a number of projects that the Fund is offering to the private sector for investment, according to Walid Labadi, IFC Country Manager for Egypt, Libya and Yemen. He also indicated that the IFC spent a total of USD 307mn in Egypt during FY19/20, with the total market expenditure of the IFC surpassing USD 4 billion, the highest in MENA. Portfolio holding MM Group for Industry and International trade’s BoD agreed to participate in the capital increase of Ebtikar (its 49.9 per cent JV held by B Investments Holding) with EGP15mn, raising their overall contribution to Ebtikar to EGP365mn. In addition, the BoD approved the acquisition of 49.9 per cent of the non-banking financial services company Basata Financial Holding for EGP30mn. The company remains a portfolio favorite and this news is a milestone in the company’s vision to unlock value from both it’s e-payments and its non-banking financial services arms.

Kuwait’s prime minister appointed a cabinet that included new faces at the oil and finance ministries, days after voters demanding change removed half the nation’s parliament. Khalifa Hamada, who served as finance minister undersecretary for more than a decade, became the fifth person to hold the post in just seven years, while Mohammed Alfares, board member of Kuwait Pertroleum, became the country’s eighth energy minister in as many years. Finally, on a portfolio level, Humansoft announced the resignation of its CEO, Mayank Baxi. The BoD appointed Georges El Yahchouchi, the President of the company’s American University of Middle East (AUM), as the new CEO, March 2021. We see little impact on the business’s operations and continue to remain confident in its ability to drive sustainable returns well-over the cost of capital, and capacity to reinstate dividends offering attractive yields.

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Sector Allocation
Utilities, 4%
Real Estate, 8%
Others, 5%
Communication Services, 5% Financials, 40%
Consumer Staples, 6%
Materials, 6%
Consumer Discretionary, 14%
Health Care, 12%
Geographic Allocation
United Arab Emirates, 12%
Others, 4%
Saudi Arabia, 44%
Kuwait, 9%
Qatar, 11%
Egypt, 20%
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Disclaimer

Objective

Achieve capital appreciation, primarily through investment in equity and equity related securities in the Middle East and North African markets.

			Fund Performance
	Performance1 1 Month YTD3	Fund 3.1% 4.6%	Benchmark2 1.6% -1.8%	Alpha 1.5% 6.4%
	1 Year	4.8%	-1.6%	6.3%
	3 Year	12.3%	10.2%	2.1%
	5 Year	45.7%	30.1%	15.6%
	Since Inc.	4.2%	-35.1%	39.2%

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

2 S&P Pan Arab Composite Index

3 As of 30th December 2020

Top 5 Holdings

	As of 30December 2020	Top 5 Holdings
	Holding		% of Fund
	Al Rajhi Bank			5.2
	Mouwasat Medical Services			4.9
	Matrix4 Fund Fund Analysis Humansoft Holdings MM Group for Industry and Trade National Commercial Bank		Benchmark 4.0 3.8 3.6
	Standard Deviation Sharpe Ratio Beta	13.5% 0.3 0.8	15.0% 0.2
	Tracking Error	6.0%
	No. of Holdings	47
	Fund Manager 4Calculated using 3-year weekly data	Sherif El Haddad
	Inception Date Fund Size	15th June 2008 USD 26 million
	Strategy Size	USD 250 million
	Domicile Currency	Bahrain USD
	Subscription & Redemption	Weekly
	Min Subscription Bloomberg Code	USD 250,000 MALMENE BI
	Management Fee	1.75%
	Benchmark Index Fund Type	S&P Pan Arab Open Ended	Composite
	Administrator	Apex
	Custodian	Standard Chartered

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10Y Fund Strategy Performance
Al Mal MENA Equity Fund
20 S&P Pan Arab Composite Index (Rebased)
18
16
14
12
10
8
6
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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None ofthe information andopinions containedherein is intendedto form the basis for any investment or trading decision, andno specific recommendations are intended. The products andtransactions describedherein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeable professionalusers of financialinstruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have beenprepared 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 describedherein.

Neither AlMalCapital 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 December 2020

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NAV Per Unit: AED 1.23

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Fund Manager Commentary

UAE indices had a superior December vs. regional peers, with the S&P UAE Index up 2.6% over December. According to a state news agency WAM, the Central Bank’s projections indicate a 3.6% increase in the country’s 2021 non-oil GDP. This is driven by an anticipated recovery in economic activity after a low 2020 base, which should witness a 4.5% contraction, according to the Central Bank’s second quarter economic survey. The state news agency indicated that AED 388bn (USD 105.6bn) worth of total economic support packages and programs have been implemented since the beginning of the pandemic.

Dubai outperformed Abu Dhabi, with the DFMGI returning 3% vs. ADSMI’s 1.6%. Towards the end of December, The Supreme Crisis and Disaster Management Committee of Dubai issued a statement over Twitter saying that an "extensive vaccination campaign" against COVID-19 will be launched in Dubai, using Pfizer-vaccine BioNTech's and is free of charge.

The government’s proactive approach in handling the pandemic is welcomed, and we think dividends will be paid in the form of an economic recovery during 2021. Dubai’s easing of movement restrictions coupled with vigilante vaccine roll-out bode well for tourism, hospitality and retail, and we are already seeing anecdotal evidence of increased mobility. This is further supported by the UK-UAE travel corridor. Despite various global risks in sight, UAE’s effective response to the pandemic crisis should help drive an economic recovery, while hosting Expo 2020, which it remains committed to, acting as a tailwind for Dubai.

Portfolio holding National Central Cooling Co (Tabreed) declared that, for a total consideration of AED963mn, it has acquired Saadiyat Cooling LLC (SCL), owned by Aldar Properties PJSC and Saadiyat District Cooling Sole Proprietorship LLC (SDCL, a wholly owned subsidiary of Aldar. The transaction cements Tabreed’s position as Abu Dhabi’s largest district cooling provider, operating 655k RT across 46 plants. The acquisition gives Tabreed access as the district cooling provider to new projects, including the Louvre Abu Dhabi, NYUAD and Manarat Al Saadiyat.

Finally, another Portfolio Holding of ours, Emirates NBD announced that its Turkish subsidiary DenizBank is signing a syndicated loan agreement over two tranches, which amount to USD 243m and USD 446m, respectively, with a 1 year-long maturity. Denizbank will allocate the raised funds towards international trade activities of their clients, primarily operating in tourism, shipping, export-related industries and agriculture, according to a bourse filing. The all-in costs for the USD and EUR tranches are Libor plus 2.5% and Euribor plus 2.25%, respectively.

Objective

Achieve medium to long-term capital growth by investing primarily in equities listed on the UAE Exchange.

			Fund Performance
	Performance1	Fund	Benchmark2	Alpha
	1 Month	2.3%	3.3%	-0.9%
	YTD3	8.6%	-8.2%	16.8%
	1 Year	9.4%	-8.4%	17.8%
	3 Year	5.1%	-17.9%	23.0%
	5 Year	27.3%	-8.2%	35.6%
	Since Inc.	49.5%	-47.8%	97.3%
1	Performance is net of fees; return is cumulative

2 S&P UAE Composite Index

3 As of 30th December 2020

	2S&P UAE Composite Index 3 th
	As of 30December 2020
		Top 3 Holdings
	Holding		% of Fund
	First Abu Dhabi Bank		22.9
	Tabreed		14.8
	Emirates NBD		13.4
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	17.1%	23.0%
	Sharpe Ratio	-0.04	-0.38
	Beta	0.66
	No. of Holdings	11

	No. of Holdings	11
4	Calculated using 3-year weekly data
		Fund Information
	Fund Manager	Sherif El Haddad
	Fund Size	AED 45 million
	Domicile	UAE
	Currency	AED
	Subscription & Redemption	Weekly
	Min Subscription	AED 100,000
	Management Fee	1.50%
	Performance Fee	20% over 10% hurdle with high
		watermark
	Financial Year End	31st December
	Benchmark Index	S&P UAE Composite Index
	Fund Type	Open Ended
	Administrator & Custodian	Standard Chartered

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Sector Allocation 10Y Fund Strategy Performance
Al Mal UAE Equity Fund S&P UAE Index (Rebased)
Other, 7%
Telecom, 7%
Financials,
47%
24
22
Real Estate, 20% 20
Industrials, 19% 18
16
Geographic Allocation
14
Other, 5%
12
10
Abu Dhabi, 38%
8
Dubai, 57% 6
Disclaimer
None ofthe information andopinions containedherein is intendedto form the basis for any investment or trading decision, andno specific recommendations are intended. The products andtransactions describedherein are not suitable for every investor. Such products and
transactions are only suitable for sophisticated and knowledgeable professionalusers of financialinstruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have beenprepared 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 describedherein.
Neither AlMalCapital 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.
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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