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Sector showdown: top MENA equity managers over five years

Sector showdown: top MENA equity managers over five years

In the wake of Vision 2030, Saudi Arabia’s investment appeal is rising but which managers are best positioned to take advantage? Here Citywire Selector compare the specialist sector’s top performers

In this analysis, Citywire Selector focuses on the two Equity – MENA managers topping the sector on a five-year total return basis.

We take a closer look at their current investment thinking to see how they have forged against a changing regional backdrop and increased outsider interest.

*Data covers the period June 2011-June 2016.

2. Sharat Dua & Akhilesh Baveja, Charlemagne Capital

Portfolio manager, Charlemagne Magna MENA

Performance: The Charlemagne duo boast a better Manager Ratio than Ali Al Nasser (see below), with 1.96 each, but their absolute return is slightly lower at 80.67% over the five-year period.

Experience: Dua and Baveja have co-run UK group Charlemagne’s flagship MENA fund since it was launched as a Dublin-domiciled vehicle in February 2011. Dua also runs the Charlemagne Magna Africa fund.

Citywire rating: In a similar vein to Al Nasser, the Charlemagne pair boast AAA ratings currently. Dua has done so since January 2015, while Baveja has been consistently AAA-rated since becoming eligible for a rating in April 2014.

Investment style: Dua and Baveja operate a similar high conviction approach to Al Nasser, holding between 30 to 50 positions in the €20 million fund. Seeking to operate with a largely stock-picking focus, the managers concentrate on major markets in the region, with the UAE and Saudi Arabia accounting for almost three-quarters of total exposure at present.

More recently the pair have tapped the renewed strength of the Saudi economy and took profits in two positions. The fund remains quite top-heavy with the 10 largest positions accounting for 57% of overall assets under management.

Conclusion: The duo’s concentrated approach has aided outperformance and limited risk, hence their higher Manager Ratio. Dua and Baveja are cautious but shrewd investors and have used market events, such as the oil price drop and the improving Saudi market, to fine-tune their fund where required.

1. Ali Al Nasser, Duet Group

Portfolio manager, Duet MENA Horizon/Palaedino – Duet Mena Horizon

Performance: Five-year total return of 94.5% coupled with a Manager Ratio of 1.02.

Experience: Dubai-based Ali Al Nasser joined the Duet Group in 2009 and oversaw the launch of the Duet MENA Horizon fund in June 2010 and its Ucits-compliant spin-off five years later. Previously, he was a senior equity analyst at Global Investment House.

Citywire rating: Al Nasser has built his rating steadily and is now into his 13th consecutive month with a top award. Prior to that he was AA-rated and has only missed receiving a rating of any kind for one month since becoming eligible in December 2014.

Investment style: Al Nasser has a high conviction approach and seeks to avoid top-down assessments. However, as he explained to Citywire Selector in February this year, the market’s focus on the oil price has not always made this an easy task. In order to reduce the impact of policy changes and oil price volatility Al Nasser has cut exposure to government-backed stocks over the past year.

He has also increased his allocation to lesser-followed MENA markets, namely Tunisia and Morocco. He was previously championed for his consistent performance, emerging as the only manager to beat the average peer in each individual 12-month period up to June 2015, which indicates his ability to adapt to the shifting sands of the Middle East and North Africa markets.

Conclusion: Al Nasser’s ability to anticipate top-down trends has helped power his performance in absolute terms, while also reducing the overall volatility of his funds.

This article originally appeared in the July/August 2016 edition of Citywire Selector magazine.

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