The primary objective of the Fund is to generate dividend income along with capital growth from an actively managed portfolio comprising of companies listed in GCC markets, which may have potential to yield dividends and with limited exposure to other equity and fixed income opportunities in the region.
The Fund will not materially change its investment policies set out in this Prospectus without obtaining approval of the Board of Directors.
The Fund’s principal investment strategy is to achieve best possible risk adjusted return. To pursue its investment objective, the Fund shall follow a disciplined investment process which is based on comprehensive research. The Fund shall follow an active management strategy for asset allocation and security selection.
The NBO GCC Fund is designed to offer investors with equity market type returns along with an income strategy over the medium term but with reduced levels of volatility. The Investment Universe comprises of GCC countries. The Fund adheres to a strict investment process, which is :
– The Fund shall invest in GCC stocks that pay out higher than average dividend yields (Dividend Yield for each of the GCC Markets as provided by Zawya.com). These stocks ideally would be of those companies listed in the regional stock exchanges that pay higher than average dividends on a sustained basis, known as high dividend yielding equities. The logic behind this investment strategy is that the companies that can sustain higher dividends generally provide stable and growth opportunities for the Investor. The Fund shall aim for 100% of NAV for the equity exposure to listed GCC companies offering dividend yield. These dividend paying companies will typically have stable cash flows, steady or growing income, high “Return on Equity” and healthy balance sheets.
– The Fund shall target additional income from investing into other equity opportunities arising from companies that have higher probabilities of increased Dividend Payouts in future (ideally one to two year period) arising out of specific events such as divestments of businesses, expected cash flow build up due to new capacity on stream, lower capacity expenditure requirements etc. The Fund will limit its exposure to 30% (of the NAV of the Fund) to such equity opportunities to capture growth and value propositions in addition to investing in IPO’s (Initial Public Offerings) in the region.
– The Fund shall also target additional income from investing into “opportunistic fixed income opportunities. The Fund plans to use fixed Income instruments primarily as hedges for generating income in weak market conditions. Such exposures shall be limited to 20% of NAV of the Fund.
It is anticipated that the above investment strategy will benefit the Fund in terms of reasonable capital appreciation in rising markets while protecting the Unitholders’ assets in falling markets.
Asset Allocation Strategy
The Dividend Policy is set within the framework of CMA regulation, wherein the Investment Manager has the discretion to distribute or reinvest the dividends.
The Board of Directors of the Fund may decide to distribute or reinvest by way of dividend, the surplus by way of realized profit, dividends and interest, net of losses, expenses and taxes, if any, to Unitholders of the Fund, if such surplus is available and adequate for distribution in the opinion of the Investment Manager.
The Investment Manager shall recommend to the Board of Directors, a minimum distribution of 80% of cash dividend and interest received from invested securities on a full year basis, subject to CMA regulations.
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