AL Mal UAE Equity Fund — Fund Information / Factsheet 2023

Nov 3, 2023

Al Mal MENA Equity Fact Sheet October 2023 NAV Per Unit: USD 11.07

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Fund Manager Commentary

Objective

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

The current geopolitical landscape in the region and the possibility of further escalation have heightened uncertainties regarding the economic and financial market prospects. These events have once again introduced unwelcome ambiguity into financial markets, which is expected to endure for an extended period.

	Performance1	Fund	Fund Performance Benchmark2	Alpha
	1 Month YTD3 1 Year	-5.3% 9.4% 4.0%	-5.4% -4.6% -12.2%	0.1% 14.0% 16.2%
	3 Year	47.5%	17.7%	29.8%
	5 Year	64.7%	21.7%	43.0%
	Since Inc.	45.7%	-27.1%	72.8%
1	Performance is net of fees; return	is cumulative
2	S&P Pan Arab Composite Index
3	As of 25thOctober 2023

As a result of the issues, regional market reported a strong sell-off in October when all the GCC market reported huge selling pressure and MSCI GCC Index lost 4.4% in October 2023. Qatar market witnessed the maximum decline of 7.1% during the month. In UAE, Dubai market witnessed the decline of 6.9% during the month. However, on the YTD basis the DFM exchange is still showing good growth of 16.2% by the end of Oct-23. FTSE ADX Index too reported decline of 4.5% in the month. Saudi Arabia Tadawul Index reported a decline of 3.3% while Kuwait market declined by 5.2% during the month.

Among the macro news, the IMF cut growth forecasts for 2023 for the GCC, but growth accelerates again next year as oil production cuts unwind. Nominal GDP growth forecasts were revised upwards as the higher oil prices offset the drag from lower oil output. Saudi Arabia's non-oil GDP remains healthy and continues to rise by up to 6% as seen in the last quarter of the year. The Kingdom’s Vision 2030 focuses on diversifying the economy outside the oil sector. Saudi Arabia is the fastest growing among the Group of Twenty (G20) countries in the tourism sector, as the number of tourists in the Kingdom has reached more than 30 million. The Kingdom is investing more than USD800bn in the tourism sector.

	Holding	Top 5 Holdings	% of Fund
	ELM Company Saudi Telecom Company Saudi National Bank		5.4 4.9 4.6
	Adnoc Drilling Company		4.5
	Abu Dhabi Ports Company		4.1

Among our major holdings, Alinma Bank announced a quarterly dividend of SAR0.30 per share for 3Q23. Alinma paid SAR0.25 for 1Q23 and SAR0.30 for 2Q23, bringing a 9M23 dividend to SAR0.85 (pay-out: 50%). Alinma’s capitalization is satisfactory. As of 2Q23, Alinma’s CET 1 ratio was 14.6% vs. sector median of 16.5%. Alinma Bank reported 3Q23 profit of SAR1,324mn (EPS: SAR0.66), up 8% Q-o-Q and 34% Y-o-Y.

		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	10.7%	12.1%
	Tracking Error	4.9%
	Beta	0.8
	No. of Holdings	34
	4Calculated using 3-year weekly data

We have increased the cash allocation in the fund and the fund remains well diversified with 34 names with financials accounting for 22% of the fund. The top3 holdings constitute 14.9% of the fund. The fund however continued to outperform the market despite the downward pressure as the fund recorded YTD growth of 9.4% as compared to the benchmark index decline of 4.6% on YTD basis. We will remain conservative on the short-term basis and will churn the portfolio to defensive name and cash till the situation becomes clearer.

	Fund Manager	Faisal Hasan, CFA Fund Information
	Inception Date	15th June 2008
	Fund Size	USD 23 million
	Strategy Size	USD 250 million
	Domicile	Bahrain
	Currency	USD
	Subscription & Redemption Min Subscription	Weekly USD 50,000
	Bloomberg Code	MALMENE BI
	Management Fee	1.75%
	Benchmark Index	S&P Pan Arab Composite
	Fund Type	Open Ended
	Administrator	Apex
	Custodian	Standard Chartered

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Sector Allocation
22% - Financials
15% - Energy
10% - Consumer Discretionary
10% - Industrials
8% - Information Technology
8% - Cash
7% - Utilities
6% - Materials
5% - Real Estate
5% - Communication Services
4% - Consumer Staples
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10Y Fund Strategy Performance
24
46% - Saudi Arabia 22 Al Mal MENA Equity Fund Benchmark
29% - UAE 20
8% - Qatar 18
8% - Cash 16
5% - Kuwait 14
2% - Morocco 12
1% - Bahrain 10
1% - Oman 8
6
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
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Geographic Allocation

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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. Suchproducts and transactions are only suitable for sophisticated andknowledgeable professionalusers offinancial instruments, andare structuredand customized to the needs andobjectives ofeachinvestor. The information andopinions containedherein have beenpreparedfor 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 AlMalCapital PSCnor any ofits affiliates, directors, authorized managers and/or employees accepts liability for any loss arising from the use ofor makes any representation as to the accuracy or completeness of the terms and conditions ofproducts 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.

October 2023 NAV Per Unit: AED 1.66

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Al Mal UAE Equity Fact Sheet

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Fund Manager Commentary

The current geopolitical landscape in the region and the possibility of further escalation have heightened uncertainties regarding the economic and financial market prospects. These events have once again introduced unwelcome ambiguity into financial markets, which is expected to endure for an extended period.

As a result of the issues, regional market reported a strong sell-off in October when all the GCC market reported huge selling pressure and MSCI GCC Index lost 4.4% in October 2023. In UAE, Dubai market witnessed the decline of 6.9% during the month. However, on the YTD basis the DFM exchange is still showing good growth of 16.2% by the end of Oct-23. FTSE ADX Index too reported decline of 4.5% in the month which resulted in the index showing YTD losses of 8.5%.

Among the macro news, the IMF cut growth forecasts for 2023 for the GCC, but growth accelerates again next year as oil production cuts unwind. Nominal GDP growth forecasts were revised upwards as the higher oil prices offset the drag from lower oil output. UAE is on track for strong growth in the fourth quarter of this year, helped by population increase, government spending and growth in transport, travel and tourism, trade, and hospitality among other non-oil sectors. The Central Bank of the UAE has projected 3.3% growth for 2023 and 4.3% for 2024. In October, the International Monetary Fund (IMF) projected that the UAE economy will expand by 3.4% in 2023 and 4.0% next year.

Among our major holdings, ADIB reported a growth of 53% in net profit for the first nine months of 2023 to AED3.75bn from AE2.5bn in the corresponding period last year. Revenue for the first nine months of 2023 improved by 48% to AED6.7bn compared to AED4.5bn last year due to income diversification mix and growth across all business segments and products. Another bank ADCB revealed net profit of AED 1.9 bn was steady QoQ and increased 22% YoY. Operating income of AED 12.2bn increased 23% its cost to income ratio having improved 360 basis points YoY to 32.5%.

We have increased the cash allocation in the fund and the fund remains well diversified with 24 names with financials accounting for 28% of the fund. The top-3 holdings constitute 20.2% of the fund. The fund however continued to outperform the market despite the downward pressure as the fund recorded YTD growth of 9.8% as compared to the benchmark index decline of 2.4% on YTD basis. We will remain conservative on the short-term basis and will churn the portfolio to defensive name and cash till the situation becomes clearer.

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Sector Allocation
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28% - Financials
15% - Industrials
12% - Real Estate
12% - Cash
12% - Energy
10% - Utilities
7% - Consumer Discretionary
2% - Materials
2% - Communication Services
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Objective

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

Fund Performance

	Performance1 1 Month	Fund -5.4%	Benchmark2 -8.9%	Relative Perf. 3.5%
	YTD*	9.8%	-2.4%	12.2%
	1 Year	7.5%	-4.1%	11.6%
	3 Years	78.0%	56.0%	22.0%
	5 Year	61.9%	18.5%	43.4%
	Since Inc.	127.5%	-29.4%	156.9%

1 Performance is net of fees; return is cumulative

2 S&P UAE Domestic 10% Capped Index

3 As of 25th October 2023

Top 3 Holdings

		Top 3 Holdings
	Holding		% of Fund
	Abu Dhabi Ports		7.2
	Adnoc Drilling Company		6.5
	Emirates NBD		6.5
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	11.5%	15.1%
	Tracking Error	6.9%
	Beta	0.7
	No. of Holdings	24

4 Calculated using 3-year weekly data

Fund Information

	Fund Manager	Faisal Hasan, CFA
	Fund Size	AED 47 million
	Domicile	UAE
	Currency	AED
	Subscription & Redemption	Weekly
	Min Subscription	AED 40,000
	Management Fee	1.50%
	Performance Fee	20% over 10% hurdle with high watermark
	Financial Year End	31st December
	Benchmark Index	S&P UAE Domestic 10% Capped Index
	Fund Type	Open Ended
	Administrator & Custodian	Standard Chartered

10Y Fund Strategy Performance

Geographic Allocation

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52% - Abu Dhabi
34% - Dubai
12% - Cash
2% - KSA
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Al Mal UAE Equity Fund Benchmark
33
30
27
24
21
18
15
12
9
6
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
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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. Suchproducts and transactions are only suitable for sophisticated andknowledgeable professionalusers offinancial instruments, andare structuredand customized to the needs andobjectives ofeachinvestor. The information andopinions containedherein have beenpreparedfor 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 AlMalCapital PSCnor any ofits affiliates, directors, authorized managers and/or employees accepts liability for any loss arising from the use ofor makes any representation as to the accuracy or completeness of the terms and conditions ofproducts 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.