The fund's objective is to achieve capital appreciation by investing in Sharia-compliant companies listed on the Qatar Exchange as per the predefined Sharia criteria set forth in Qatar.
|Fund Manager||Amwal LLC|
|Founder||Investment House Co.|
|Regulator||Qatar Central Bank
S&P Qatar Domestic Capped
|Launch Date||September 2006|
|Base Currency||Qatari Riyal|
|Initial Investment||QR 250,000|
|Subsequent Investment||QR 25,000|
|Subscription & Redemption||Monthly|
|Management Fee||1.00% per annum|
15% over any annual return
|Performance Fee||exceeding 10%.|
|Custodian||Qatar National Bank|
|Auditors||Ernst & Young|
|License No. of Fund||I.F/5/2006|
|Fund registration No. at Ministry of Economy & Commerce||33162|
Equities saw a moderate sell off in April following a strong March. The S&P Qatar Domestic Capped Index was down -2.5%, while the fund was down -2.3% in April. Uncertainty over future price of oil has the biggest impact on stock market volatility in our view. Based on current earnings, fundamental valuations are attractive but future earnings depend significantly on oil price, and as a result government spending. Our view remains positive on oil but it is difficult to be certain, particularly with the drop last year to fundamentally unjustified low levels. Our strategy is to be neutral on stocks highly correlated to oil unless they trade at very attractive valuations. Our portfolio is tilted more towards value and defensive stocks which have a more certain earnings outlook and good dividend pay-out.
Notable stock moves in April included Medicare (1.5% weight in portfolio) which was down 15% after weak Q1 results. Real estate stocks were down 6-10% and Islamic banks were down around 5-6%. Among the few positive performers were Gulf Warehousing up +10% after good Q1 results and QIMD/Qatar Fuel up around 1-2%.
The Qatari market slipped into negative territory (approx. 5 %) in September 2016 which made QE the second worst performing index in the region. Analysts had anticipated $300-500 million of new funds coming into the market on QE inclusion in FTSE Emerging Market Indices, but new money apparently dripped slowly into the market in the following few weeks. This was against the investor’s (mainly retail) sentiment. They panicked on anemic demand and started liquidating their positions before the long Eid holiday and climaxed right after it.
The fund, after building a cash cushion during August 2016, had started buying beaten down stocks but investors soon realized their negative sentiments were far-stretched and started indiscriminately bidding up prices. This increased prices from September lows to August highs for some major stocks. The fund took advantage and started reducing again some volatile positions and reallocating to more defensive stocks, on expectation of a dismal earnings season.
During the month, the fund lost 4.3% (net after fees and expenses) which is similar to the return of the benchmark Index. The reason for this being the fund having positions equal to the heavy weights in the benchmark. YTD the fund is up 1.4% while the benchmark is down by -3.6%, which shows the fund has outperformed the Index by 5%.