“A strong and growing investment team with relatively modest staff turnover; the development of disciplined risk monitoring procedures compared to its peers; and a consistent track record and continuing outperformance of funds relative to their benchmarks and peers,” according to S&P Capital IQ, the underlying factors for SICO’s fund grading.
Putting SICO’s performance into context, of the 150 or so funds investing in the MENA region, only eighteen achieved S&P Capital IQ grading in 2012, with only three securing a ‘Gold’ grading and fifteen achieving ‘Silver’ status. Of these funds, the only three that achieved a ‘Gold’ grading are all managed by SICO.
The Khaleej Equity Fund, which invests in GCC listed equities, achieved a return of 5.9% for the year, and has outperformed its benchmark for seven out of eight years since its March 2004 inception. It is one of the few funds in the region to be awarded a ‘Gold’ fund grading and a ‘Five-year Long-term’ grading by Standard & Poor’s Capital IQ. The fund also received the ‘Outstanding Fund Performance & Innovation’ award at the fourth annual MENA Fund Manager Performance Awards ceremony in January 2013.
The SICO Gulf Equity Fund, which invests in GCC-listed equities, but excluding Saudi Arabia, delivered a return of 6.1% for the year. The fund, which is graded ‘Gold’ by S&P Capital IQ, has outperformed its benchmark in five of six full calendar years since its March 2006 launch.
The SICO Arab Financial Fund, which invests primarily in MENA financial sector equities, achieved a return of 2.9% in 2012. Graded ‘Gold’ by S&P Capital IQ, the funds relative returns have been consistently strong, outperforming the benchmark in each calendar since its inception in August 2007.
The SICO Selected Securities Fund, which invests principally in Bahrain-listed equity and debt securities, achieved a return of 1.2% for the year. Graded ‘Silver’ by S&P Capital IQ, the fund has one of the longest track records in its asset class, and has outperformed its benchmark in 11 out of 13 years since its May 1998 inception.
The SICO Kingdom Equity Fund, which invests primarily in Saudi-listed equities, delivered a return of 8.7% for 2012. The fund has been graded ‘Silver’ by S&P Capital IQ, and has posted an initial strong performance relative to its benchmark since its launch in February 2011.
In addition to these equity funds, the SICO Money Market Fund recorded an annualised return of 0.99% in 2012. Launched in May 2010, the fund invests in regional investment grade money market instruments such as GCC government bills and notes, corporate paper, and domestic banks’ term deposits.
“SICO’s prudent investment style has enabled us to deliver another strong performance for our clients in 2012, despite markets remaining volatile during the year. The combination of our regional insight and quality of research is a key factor in enabling SICO to provide consistent and stable long-term returns to our investors,” Anthony Mallis, Securities & Investment Company’s CEO, said.
“Looking ahead, equities remain the preferred asset class as cash continues to provide a near zero return. GCC equities are forecast to generate moderate returns in the range of 10% to 15% in 2013, driven by an improvement in overall fundamentals, multiple re-rating and earnings growth. Regional markets are currently significantly undervalued, and we believe offer attractive opportunities to long-term investors,” Mallis added.
During 2012, SICO maintained its status as Bahrain’s largest GCC public markets asset manager, with total assets under management increasing by 10% to BD 226 million. Assets under management comprise SICO’s own funds; funds sponsored by other institutions for which SICO acts as the investment manager; and discretionary portfolio managed accounts, by which SICO provides tailor-made investment solutions to fixed income and equity oriented institutional clients.