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Arab Gateway Fund
The Arab Gateway Fund is an open-ended fund giving both regional and international investors access to 15 Arab equity markets, including the GCC. The Arab Gateway Fund is SHUAA Capital Asset Management’s flagship product.
| Structure | An open ended investment fund registered in the British Virgin Islands. The Fund is recognised under the Mutual Funds Acts 1996 |
| Objective | To achieve capital appreciation through investing in Arab Equities in a conventional manner |
| Markets covered | Middle East and North Africa |
| Base currency | USD |
| Management Fee | 1.50% |
| Performance Fee | Performance Equalisation - 15% over 10% |
| Minimum subscription | USD 100,000 |
| Subscription/Redemption | Weekly |
| Administrator | Close Funds Services Ltd. |
| Custodian | RBC Dexia -London |
| Bloomberg | ARABGAT VI |
| ISIN | VGG0504F1009 |
The Fund Manager's Market Commentary as of January 31, 2012
The Arab Gateway Fund gained 2.36% in January vs. a rise of 2.78% for the S&P Pan Arab Composite. MENA markets continued their December rally with two of the worst performers of last year, namely UAE and Egypt surging 8% and 25% respectively. Although the fund benefited from our OW positions in the UAE and Qatar, our slightly higher cash allocation as well as a sharp run-up in retail driven speculative names in Saudi Arabia largely offset those gains.
In line with our well flagged expectations, macro data in the US and emerging markets continues to show remarkable resilience and has underscored a bang of a start to the year across global markets. Although European debt issues remain front page news, for now they seem to have found greater acceptance in the context of the global growth picture. However, without doubt, Europe remains the greatest and most poignant threat to the current recovery; accordingly we expect inevitable hurdles in the process to take a toll on already fragile market sentiment and precipitate further volatility. Having said that, our base case remains a gradual, upward trending global economic expansion and barring a game changing economic event, we would view such volatility as an opportunity to be taken advantage of.
Our constructive stance on MENA markets has played out well in January as nearly all regional indices recorded decent gains. Along with supportive global market backdrop, regional bourses have also been fuelled by strong fourth quarter earnings, most notably in Saudi Arabia. We expect this fundamental strength to continue being priced into valuations as GOSI announced increasing its stakes in publically listed companies and the CMA gears up to open the Saudi market to foreigners over the near term. Qatar, the best performing market in the region for 2011 declined for the month of January as investors booked profits after a stellar multi-month rally, especially in Qatari banks. Although profit booking may have been warranted after the run-up, we certainly do not view valuations in Qatar to be stretched and expect the market to perform well in 2012 on the back of still robust and unchanged fundamentals. Egypt surged over 20% in January as the third round of parliamentary elections completed a parliament elect and underscored the success of the political transition thus far. Although macro risks, especially those on FX persist, we look for a continuing political transition to further boost sentiment in Egypt but do not preclude near term softness after the sharp rally.
We remain firmly overweight Saudi Arabia, Qatar and the UAE with an increasing overweight in Egypt, however we plan to increase this position only gradually with investments in high conviction picks. Through January we booked profits in some Qatari names rotating into higher beta UAE names as the latter market found a substantial bid. We also booked gains in some Saudi names where valuations were full consequently increasing our cash level temporarily.
Accumulated Deemed Distributed Income
Arab Gateway Fund LTD has appointed PwC FS Tax GmbH Frankfurt to examine and certify the annual German Tax reporting figures including the Deemed Distribution Income (DDI), which is published in the electronic Federal Gazette as well as to WM Datenservice each year, four months after the Fund's fiscal year end at the latest.
To view the latest published Accumulated Deemed Distribution Income (ADDI) figures, please click here
Disclaimer
SHUAA Capital psc, its affiliates, and the Fund do not provide tax advice, and nothing in this section should be construed as tax advice. Before acting on any such information, consult your own accountant or tax advisor.
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