Al Mal Capital PSC, a subsidiary of Dubai Investments PJSC and a diversified, multi-line investment institution licensed and regulated by the Central Bank of the UAE, today announced that the Al Mal MENA Equity Fund has generated an alpha of +7.31% this year as of June 8.

The Fund generated a year-to-date returns of +6.87% versus a drop of -0.44% for the benchmark [S&P Pan Arab Large Cap Index]. The performance is a result of the Al Mal Capital Asset Management Division’s newly-adopted deep research high conviction approach.

Charles Monchau, Head of Investment Management of Al Mal Capital, said: “The Al Mal Capital Asset Management team reviewed all the Fund’s holdings and applied a thorough analysis to evaluate value versus price. Changes has touched 80% of the strategy with the most obvious one is concentrating our holdings in core names where companies demonstrated superior capital allocation capabilities.”

He added: “Markets are being pressured at the moment for several reasons. In Saudi Arabia, the regulator is moving fast with reforms to ensure MSCI inclusion and the recent developments of changing the tick size and increasing the hidden order amount. This was not received well by retail investors and day traders. However, it is a move in the right direction as it will reduce spread costs, increase transparency and most importantly attract institutional foreign investors. In the UAE, we see re-canalization of construction companies, this is dampening the whole sentiment in the market. Yet these events create good opportunities to pick quality names. Valuations are not demanding yet, at least where we see value.”

He further said: “For a variety of reasons, Middle East equities have been so far neglected as a destination of capital. However, some catalysts are expected to invert this trend. For instance, the capital markets and economic reforms in Saudi Arabia will be a game changer for the region. Moreover, we continue to see plenty of strong companies with a reasonable valuations in the UAE and some GCC countries at a time where some developed markets look expensive. Importantly, Middle East equities remain under-covered, under-owned and unappreciated by global asset allocators. This creates lots of alpha opportunities for astute fund managers. We continue to believe that going forward, the Middle East will stay one of the few regions in the world where institutional investors will strongly favor actively managed funds over passive instruments such as ETFs”.

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