Tài liệu MARKAZ SECTOR REPORT GCC ASSET MANAGEMENT - 2011 doc

Summary Version: For Full Report, please contact Jenevivu Lasrado at: JLasrado@markaz.com Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait The report is owned by Markaz and is privileged and proprietary and is subject to copyrights Sale of any copies of this report is strictly prohibited This report cannot be quoted without the prior written consent of Markaz Any user after obtaining Markaz permission to use this report must clearly mention the source as “Markaz “ The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report They not necessarily reflect the opinion of Markaz and are subject to change without notice Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall Investors should be able and willing to accept a total or partial loss of their investment Accordingly, investors may receive back less than originally invested Past performance is not necessarily indicative of future performance Kuwait Financial Centre S.A.K (Markaz) does and seeks to business, including investment banking deals, with companies covered in its research reports As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report This report may provide the addresses of, or contain hyperlinks to, websites Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein Such address or hyperlink (including addresses or hyperlinks to Markaz’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document Accessing such website or following such link through this report or Markaz’s website shall be at your own risk For further information, please contact ‘Markaz’ at P.O Box 23444, Safat 13095, Kuwait; Email: research@markaz.com ; Tel: 00965 1804800; Fax: 00965 22450647 RESEARCH Table of Contents Executive Summary Market Structure Leadership Position Performance Cost Benchmarks 10 Domicile 12 Managed Assets .13 GCC / MENA Funds 15 Equity Funds 16 Fixed Income Funds 19 Money Market Funds 21 Specialized Funds .24 Saudi Arabian Funds 26 Equity Funds 27 Fixed Income Funds 30 Money Market Funds 31 Specialized Funds .35 Kuwait Funds 36 Equity Funds 37 Fixed Income Funds 40 Money Market Funds 41 Specialized Funds .44 UAE Funds 45 Equity Funds 46 Money Market Funds 49 Qatar Funds 51 Equity Funds 52 Oman Funds 55 Equity Funds 56 Bahrain Funds 58 Equity Funds 58 Challenges 60 Appendices 65 Appendix 1: GCC Asset Management Industry - Geographic Classification / Asset Class wise – 1Q11 65 Appendix 2: GCC / MENA Funds Statistics – 1Q11 66 Appendix 3: Saudi Funds Statistics – 1Q11 72 Appendix 4: Kuwait Funds Statistics – 1Q11 77 Appendix 5: UAE Funds Statistics – 1Q11 80 Appendix 6: Qatar Funds Statistics – 1Q11 82 Appendix 7: Oman Funds Statistics – 1Q11 83 Appendix 8: Bahrain Funds Statistics – 1Q11 84 Appendix 9: Consolidated Fund Manager Ranking – 1Q11 .85 Appendix 10: Consolidated Fund Manager Ranking – Equities – 1Q11 86 Kuwait Financial Centre “Markaz” RESEARCH Appendix Appendix Appendix Appendix 11: 12: 13: 14: Fund Rankings (by Quarterly Alpha) – 1Q11 87 Benchmark Details 89 AUM Drill Down – Asset Class wise – 1Q11 90 AUM Drill Down – Country wise – 1Q11 91 Kuwait Financial Centre “Markaz” RESEARCH GCC Asset Management - 2011 Executive Summary Market Structure Markaz Research is available on Bloomberg Type “MRKZ” Thomson Financial Reuters Knowledge Zawya Investor Noozz GCC Asset Management Industry, with roughly 100 asset management companies, manages USD 28.9bn1 in assets in about 325 funds as of 31st March 2011 Geographically, Saudi Arabia country funds account for 62% of the total, followed by Kuwait country funds with 19% share and GCC / MENA mandated funds with 15% share In terms of products, Money Market funds lead the pack with a 50% share, followed by Equities at 44% while the remainder is in Fixed Income and Specialized funds Of the total, Islamic funds manage USD 17.6bn (61%) in assets Figure 1: GCC Asset Management Industry – AUMs (1Q11) M.R Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com Layla Jasem Al-Ammar Assistant Manager +965 2224 8000 ext 1205 LAmmar@markaz.com Madhu Soothanan Senior Research Analyst +965 2224 8000 ext 4603 msoothanan@markaz.com Kuwait Financial Centre “Markaz” P.O Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com Source: Zawya & Markaz Research In terms of number of funds, GCC / MENA mandated funds top the table with 131 funds (40%), followed by Saudi Arabia country funds with 109 funds (34%) and Kuwait country funds with 51 funds (16%) Product wise, there are 200 Equity funds, 60 Money Market funds, 21 Fixed Income funds and 44 Specialized funds Contrary to assets under management, there are more Conventional funds (176 funds) than Islamic funds (149 funds) Figure 2: GCC Asset Management Industry – Number of Funds (1Q11) Source: Zawya & Markaz Research Throughout this report, assets under management refers only to mutual fund assets unless mentioned explicitly Kuwait Financial Centre “Markaz” RESEARCH Kuwait, with USD 5.4bn of assets, had the highest AUM to GDP ratio of 4.1%, closely followed by Saudi Arabia with AUM to GDP ratio of 4% The ratio for all other countries was less than 0.5% implying lack of institutional presence in the investment segment Kuwait has the highest AUM/GDP ratio of 4.1% indicating high institutionalization Table 1: GCC Asset Management Snapshot (1Q11) Conventional Funds Islamic Funds No of AUM Funds ($mn) Kuwait 30 4,219 Saudi Arabia 38 2,941 Qatar 392 UAE 15 607 Oman 100 Bahrain 20 GCC / MENA 78 3,022 Total 176 11,299 Source: Zawya & Markaz Research No of Funds 21 71 0 53 149 AUM ($mn) 1,182 14,915 17 91 0 1,345 17,550 Total No of Funds 51 109 10 18 131 325 AUM ($mn) 5,401 17,856 409 698 100 20 4,367 28,850 Average Fund Size ($mn) 106 164 41 39 20 20 33 89 Mcap ($bn) 114 355 88 126 16 14 713 713 GDP ($bn) 131 444 129 302 56 23 N.A 1,085 AUM/GDP 4.1% 4.0% 0.3% 0.2% 0.2% 0.1% N.A 2.7% Leadership Position The market is very concentrated amongst the top asset management companies, with the top 10 asset managers accounting for 72% of the total fund management industry NCB Capital leads the list of large asset management companies with USD 6bn in assets (21% market share), followed by Sambacapital with USD 3.3bn in assets (11.5% share) More than 65% of asset managers manage less than USD 100mn The bottom 50% of fund managers account for just 3.3% of the total industry NCB Capital is the largest fund management company in GCC with USD6bn in assets Table 2: Top 10 Fund Managers (1Q11) No Fund Manager Total AUMs ($mn) Market Share No Fund Manager Total AUMs ($mn) Market Share NCB Capital 6,028 20.9% Global Investment House 1,083 3.8% Sambacapital 3,305 11.5% Caam Saudi Fransi 1,053 3.7% Riyad Capital 2,313 8.0% National Investments Company 1,046 3.6% Al Rajhi Capital 2,239 7.8% Kuwait Financial Centre 918 3.2% HSBC Saudi Arabia 1,940 Source: Zawya & Markaz Research 6.7% 10 Kuwait Investment Company 788 2.7% In terms of segments, different asset managers take the top spot in each segment NCB Capital dominates Saudi Arabia with 33% market share Kuwait is a relatively more competitive market with the top asset manager (National Investments Co.) having only 17% market share closely followed by Kuwait Financial Centre (Markaz) at 16% National Bank of Abu Dhabi and Epicure Managers Qatar Ltd were the top asset managers in UAE and Qatar, respectively Kuwait Financial Centre “Markaz” RESEARCH Table 3: Top Asset Managers (By Segment) - 1Q11 Segment NCB Capital Segment Market Share 5,908 Manager Saudi Arabia AUMs ($mn) 33% Kuwait National Investments Company 915 17% GCC / MENA Caam Saudi Fransi 900 21% UAE National Bank of Abu Dhabi 281 40% Qatar Epicure Managers Qatar Limited 243 59% Oman BankMuscat SAOG 30 30% N.M N.M Bahrain N.M Source: Zawya & Markaz Research Performance Equity funds mirrored the stock markets with majority of funds giving negative returns in 1Q11 Almost all GCC stock market indices were down in the first quarter of 2011 GCC Equity funds also mirrored the performance with majority of funds giving negative returns in 1Q11 Among equity funds, Al Safwa Investment fund (National Investments Company) was the best performer (in terms of Alpha) with 1Q returns of 1.58% and alpha of 11.1%2 This was followed by Al Dar – Securities Fund with return of 0.41% and alpha of 9.88% MENA Income Fund (Al Mal Capital) was the best performer amongst Fixed Income funds with return of 2.06% and alpha of 1.2% for the first quarter Al Mal - Liquidity Fund (Al Mal Capital) topped the list of Money Market funds with a return of 0.76% and alpha of 0.62% On an Asset Weighted basis, Fixed Income & Money Market funds gave better returns than equity funds in 1Q11 Islamic fixed income funds were top performers in GCC (+1.4%) and Saudi Arabia (+0.2%) Islamic money market funds topped in Kuwait (-0.3%) while Conventional money market funds topped in UAE (+0.8%) Table 4: Asset Weighted Returns – Top Returns (1Q11) Segment Category 1Q11 (%) Qatar On an Asset Weighted basis, in 1Q11, Fixed Income & Money Market funds gave better returns than equity funds Equity - Islamic 3.9% GCC / MENA Fixed Income - Islamic 1.4% UAE Money Market - Conventional 0.8% Saudi Arabia Fixed Income - Islamic 0.2% Kuwait Money Market - Islamic -0.3% Oman Equity - Conventional Source: Zawya & Markaz Research -7.2% Contrary to returns, equity funds were the top Alpha generators Conventional equity funds produced highest alpha in Saudi, while Islamic equity funds gave highest alpha in GCC, Kuwait, UAE and Qatar Alpha is based on our selection of benchmark and not necessarily based on the benchmark followed by the fund Kuwait Financial Centre “Markaz” RESEARCH Table 5: Asset Weighted Returns – Alpha (1Q11) Segment Category Alpha Qatar Equity - Islamic 6.50% Kuwait Equity - Islamic 6.40% UAE Equity - Islamic 3.50% Oman Equity - Conventional 1.50% GCC / MENA Equity - Islamic 1.40% Saudi Arabia Equity - Conventional Source: Zawya & Markaz Research 0.90% 2010 Performance In 2010, Qatar Conventional & Islamic equity funds delivered the highest asset weighted returns of 27.59% and 19.95% respectively In 2010, among equity funds, Qatar Conventional & Islamic funds delivered the highest asset weighted returns of 27.59% and 19.95% respectively Kuwait conventional funds with asset weighted return of 18.89% gave the next best performance In terms of Alpha, Watan NBK Kuwait Equity Fund was the best performer generating 17% alpha for 2010 In 2010, Saudi focused conventional equity funds returned 15.5% on an asset weighted basis while Saudi Islamic funds delivered 13.61% Among Fixed income funds, GCC Conventional funds gave the highest asset weighted return of 6.84% followed by GCC Islamic funds with 5.55% return Makaseb - Income Fund was the top performer in GCC conventional category with 14.7% returns in 2010 UAE conventional Money Market funds gave the best performance among money market funds on an asset weighted basis UAE conventional funds delivered 3.83% in 2010 followed by 1.63% by UAE Islamic funds There are only money market funds in UAE, one each in conventional and Islamic category Kuwait Financial Centre “Markaz” RESEARCH Table 6: Performance – 2010 Equity No Of Funds Weighted Return (2010) GCC - Conventional 57 13.07% PF(LUX) - Middle East & North Africa Fund 12.62% N.A N.A GCC - Islamic 26 11.81% Jadwa - GCC Equity Fund 8.50% 0.01 1.47 Category Top Performer 2010 Alpha Inform ation Ratio Sharpe Ratio Saudi - Conventional 23 15.47% Morgan Stanley - Saudi Equity Fund 8.03% N.A N.A Saudi - Islamic 27 13.61% Anb Invest - Al Mubarak Saudi Equity Fund 8.70% -0.01 0.44 Kuwait - Conventional 22 18.89% Watan - NBK Kuwait Equity Fund 17.02% -0.04 0.24 Kuwait - Islamic 14 7.47% CapCorp - Local Fund -8.65% N.A N.A UAE - Conventional 13 -4.12% Makaseb - Emirates Opportunities Fund 3.91% -0.09 0.26 UAE - Islamic -3.81% NBAD - UAE Islamic Fund 4.17% -0.05 0.67 Qatar - Conventional 27.59% 12.36% 0.05 0.13 Qatar - Islamic 19.95% SHUAA - Qatar Gate N Fund Global - Al Beit Al Mali Shariah Compliant Fund -4.80% 0.11 N.A Oman - Conventional 7.55% Vision - Emerging Oman Fund 4.06% -0.03 0.21 Bahrain - Conventional 4.79% SIC - Selected Securities Fund 6.59% -0.02 -0.34 Fixed Income Category No Of Funds Weighted Return (2010) Top Performer 2010 Alpha Sharpe Ratio Informati on Ratio 0.92 GCC - Conventional 6.84% Makaseb - Income Fund 3.38% N.A GCC - Islamic 5.55% FFTW - BNP Paribas Hilal Income Fund -3.02% N.A N.A Saudi - Islamic 0.63% SHCC - Al Yusr Murabaha & Sukuk Fund 0.08% 2.66 0.72 Kuwait - Conventional -5.50% Gulf - KD Bond Fund -2.60% -0.01 -0.19 Money Market No Of Funds Weighted Return (2010) GCC - Conventional 0.64% CAAM - SAR Money Market Fund 0.45% 2.45 -0.95 GCC - Islamic 0.44% Jadwa - US Dollar Murabaha Fund 0.29% 0.91 -0.59 4.68 Category Top Performer 2010 Alpha Sharpe Ratio Informati on Ratio Saudi - Conventional 10 0.87% Samba - Al Razeen Riyal Fund 0.79% 3.33 Saudi - Islamic 32 0.63% The Investor - Saudi Riyal Murabaha Fund 2.92% N.A N.A Kuwait - Conventional -3.47% Global - KD Money Market Fund 1.10% N.A 0.89 Kuwait - Islamic -1.15% Al Imtiaz - Money Market Fund 3.13% 3.07 2.14 UAE - Conventional 3.83% Al Mal - Liquidity Fund 2.34% N.A N.A UAE - Islamic 1.63% CBD - Al Dana Murabaha Fund 0.14% 0.23 N.A Source: Zawya, S&P & Markaz Research Note: Alpha against our selection of benchmark Information Ratio against Fund's own benchmark (3 years), Sharpe Ratio (3 years) Kuwait Financial Centre “Markaz” RESEARCH Cost Equity Funds in the GCC region, on average, charge 1.48% as fund management fee This is apart from Administration and custodian fees UAE funds charge the highest management fee of 1.73%, followed by Saudi Arabian funds (1.68%) Performance fee is virtually nonexistent in Saudi funds Equity Funds, on average, charge 1.48% as fund management fee Table : Average Cost of Equity Funds Administration Subscription Redemption Performance Custodian Qatar 0.14% 2.55% 0.80% 15.50% 0.32% 1.53% Oman 0.33% 2.40% 2.20% 7.00% 0.15% 1.44% Bahrain 0.08% 3.00% 0.00% 20.00% 0.09% 1.00% UAE 0.14% 2.23% 2.23% 11.15% 0.14% 1.73% Kuwait 0.07% 1.32% 0.32% 8.38% 0.10% 1.38% Saudi 0.14% 1.68% 0.19% 0.60% 0.09% 1.68% 9.64% 0.12% 1.63% GCC / MENA 0.15% 2.55% 0.62% Source: Zawya & Markaz Research Note: Performance fee is charged only after achieving a threshold return Management As in any other markets, Fixed Income and Money Market funds are cheaper in GCC region as well GCC / MENA mandated funds charge the highest management fee of 1.06% in Fixed Income category Table: Average Cost of Fixed Income Funds Administration Subscription Redemption Performance Custodian Qatar N.A N.A N.A N.A N.A N.A Oman N.A N.A N.A N.A N.A N.A Bahrain N.A N.A N.A N.A N.A N.A UAE Management N.A N.A N.A N.A N.A N.A Kuwait 0.17% 0.25% 0.00% 0.00% 0.08% 0.69% Saudi 0.00% 0.75% 0.25% 0.00% 0.25% 0.75% 1.88% GCC / MENA 0.15% Source: Zawya & Markaz Research 0.38% 2.79% 0.13% 1.06% Saudi Arabian Money Market funds charge the highest management fee of 1.61%, which is due to high cost associated with some Trade Finance funds GCC / MENA funds are the cheapest (0.50%) Table: Average Cost of Money Market Funds Administration Subscription Redemption Performance Custodian Qatar N.A N.A N.A N.A N.A N.A Oman N.A N.A N.A N.A N.A N.A Bahrain Management N.A N.A N.A N.A N.A N.A UAE 0.03% 1.00% 0.00% 0.00% 0.03% 0.63% Kuwait 0.16% 0.25% 0.09% 0.00% 0.09% 0.84% Saudi 0.15% 0.01% 0.02% 0.00% 0.02% 1.61% 0.78% 0.00% 0.00% 0.01% 0.50% GCC / MENA 0.14% Source: Zawya & Markaz Research Kuwait Financial Centre “Markaz” RESEARCH Benchmarks Most GCC country funds adopt local stock market indices as their benchmark Most GCC country funds adopt local stock market indices as their benchmark As local indices are price return indices, fund manager performance (with respect to the benchmark) is overstated to the extent of dividend yield Among global index providers, MSCI and S&P are the most active in the region Majority of Shariah complaint funds use S&P indices as benchmarks since MSCI discontinued Saudi securities from its indices Table 7: Benchmark Used by Most Equity Funds Conventional Saudi Arabia Tadawul All Share Index (12) Islamic S&P Saudi Arabia Shariah Index (15) Kuwait KSE Weighted Index (7) KSE Weighted / Global Islamic Index (2) UAE MSCI UAE Index (5) N.A Qatar Doha Stock Market Index (6) N.A Oman Muscat SM Index (4) N.A GCC / MENA S&P GCC Index (8) S&P GCC Composite Shariah Index (10) Note: Numbers in bracket indicate the number of funds using the benchmark Source: Zawya & Markaz Research TASI Index is used by most Saudi Arabian Conventional equity funds In Saudi Arabia, the TASI Index is used as a benchmark by 12 out of the total 23 conventional equity funds 16 of the 27 Islamic equity funds use S&P Saudi Arabia Shariah Index as a benchmark Among money market funds, most funds in Saudi Arabia use SIBOR as the benchmark Figure 3: Benchmark Used by Saudi Conventional Equity Funds Source: Zawya & Markaz Research In Kuwait, out of the 20 conventional equity funds use KSE Weighted Index as their benchmark funds use KIC index (Kuwait Investment Company) Most GCC / MENA equity funds use S&P GCC Index and S&P Pan-Arab Shariah Index as benchmarks for conventional and Islamic funds, respectively Kuwait Financial Centre “Markaz” 10 RESEARCH Figure 4: Benchmark Used by Kuwait Conventional Equity Funds KSE Weighted Index is the most commonly used benchmark for Kuwaiti equity funds Source: Zawya & Markaz Research Kuwait Financial Centre “Markaz” 11 RESEARCH Domicile There were 140 funds domiciled in Saudi Arabia managing USD 19.3bn in assets The ranking of GCC countries in terms of number of funds domiciled, indicate that country of domicile relates to the size of each country’s asset management industry with only a few exceptions There were 140 funds domiciled in Saudi Arabia managing USD 19.3bn in assets, followed by Kuwait with 58 funds managing USD 5.7bn Bahrain, true to its reputation as a financial hub, has 39 funds with USD 1.1bn in assets Most of the funds domiciled in Bahrain are mandated to invest in GCC/MENA region Table 8: Number of Funds and Fund Size as per Country of Domicile (1Q11) Country No of Funds Fund Size ($mn) Saudi Arabia 140 19,339 Kuwait 58 5,679 Bahrain 39 1,137 UAE 26 905 Luxembourg 16 317 Channel Islands 292 Oman 196 Qatar 279 Cayman Islands 47 Ireland 55 Bermuda 296 Jordan Virgin Islands (British) 56 Isle of Man 243 Singapore 19 325 28,862 Grand Total Source: Zawya & Markaz Research Given that local investors make up the bulk of participants in GCC/MENA funds, local markets tend to suffice as domiciles for these funds, with Saudi Arabia, Kuwait and Bahrain being the most popular choices and accounting for 73% of the total Outside of the region, Luxembourg is the most prevalent location for domiciliation of funds, accounting for 5% of the total Luxembourg was the first European country to implement the Undertakings for Collective Investment in Transferable Securities (UCITS) in the 1980’s and is currently host to about 75% of UCITS authorized funds in the European Union3 As the GCC asset management industry grows and aims to diversify the investor base by attracting more foreign and institutional investors, we would expect to see managers increasingly turning to Luxembourg or other European nations for domiciliation Chevalier & Sciales, a Luxembourg law firm Kuwait Financial Centre “Markaz” 12 RESEARCH Figure 5: Funds Domiciled in each Country as % of Total (1Q11) Source: Zawya & Markaz Research Specialized Funds Despite the fact that the majority of funds across the region are of the “plain vanilla” equity variety, there are new and innovative types of funds which are being introduced to deal with the unique dynamics and opportunities presented by the GCC/MENA markets In our database, such funds are grouped under “Specialized” funds and they account for approximately 3.5% of total assets under management These Specialized Funds have ranged from standard sector-specific funds focused on such important sectors like Telecom, Banking & Financials and Real Estate, to more specific funds such as those dedicated to IPO’s, infrastructure, and capital protection etc Markaz Forsa fund (based on call options) is also a good example Some funds use advanced quantitative tools to manage risks Given the unique opportunities and challenges facing the GCC/MENA markets, these types of funds are expected to grow over the coming years as asset managers and investors attempt to capitalize on local/regional developments The growth of this type of funds ought to be encouraged by local regulatory authorities as an avenue for attracting institutional and foreign investors in order to diversify the type of investors within the industry Managed Assets The Central Bank of Kuwait on a monthly basis publishes a detailed break up of the assets of the investment companies, which includes – Portfolio investments (Managed Accounts), equity, debt and investment fund units held by local investment companies, custody accounts, foreign funds and commitments and guarantees This is by far the most transparent break-up of assets of the asset management industry available in the GCC region This provides us with a preliminary break-up between managed accounts and mutual funds for Kuwait As of May 2011, the size of Kuwait fund management industry size as disclosed by CBK is at USD 6.6bn and the assets managed under portfolio’s is at USD 54bn – a factor of 8x Similarly for Saudi Arabia, CMA provides the total assets in mutual funds, which amounts to USD 23.6bn However, SAMA does not provide Kuwait Financial Centre “Markaz” 13 RESEARCH statistics for assets managed under managed accounts This leads us to take an intelligent guess on the proportion of managed accounts to investment funds for the rest of the region We believe that Kuwait is an extreme outlier mainly due to the presence of higher number of investment companies as compared to the rest of the region Therefore, we believe that, Saudi Arabia and UAE will have a lesser proportion of managed accounts than Kuwait, but higher than smaller markets such as Qatar, Oman and Bahrain We believe that the assets managed under managed accounts will be 4x and 3.5x larger than investment funds in Saudi Arabia and the UAE as compared to 2x for the rest of the smaller markets On a GCC level, we believe that Managed accounts will be at least 5x larger than the assets managed under mutual funds Table 9: – Estimating the Size of Managed Accounts (USD Bn) – 1Q11 Investment Funds Portfolio Investments (Managed Accounts) Total Managed Accounts Proportion to Investment Funds GDP ($ bn) Total AUM / GDP Saudi Arabia 19.18 76.72 95.90 400% 444 21.6% Kuwait 6.58 54.00 60.58 821% 132 45.9% UAE 1.55 5.43 6.98 350% 302 2.3% Qatar 0.51 1.02 1.53 200% 129 1.2% Bahrain 0.29 0.58 0.87 200% 56 1.6% Oman 0.20 0.40 0.60 200% 23 2.6% Total 28.31 138.15 166.46 488% 1,086 15.3% Note: The Investment Funds figures represent AUMs managed in funds within each country regardless of Fund focus and hence does not tally with overall figure Source: CBK, SAMA, IMF, Zawya & Markaz Research AUM to GDP ratio was 2.7% if only mutual fund assets are considered If Managed Accounts are also added, the AUM to GDP ratio increases to 15.3% an increase of nearly times After accounting for assets under managed accounts, Kuwait had the highest AUM to GDP ratio of 46%, followed by Saudi Arabia with 22% Kuwait Financial Centre “Markaz” 14 RESEARCH Markaz Research Offerings Economics MENA Unrest (Apr-11) Kuwait Development Plan (Mar-11) Kuwait Investment Sector (Sept-10) The New Regulations on Kuwait Investment Sector (Jun-10) Kuwait Capital Market Law (Mar-10) The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) To Leap or To Lag: Choices before GCC Regulators (Apr-07) GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06) Sectors Capital Markets Infrastructure GCC Ports (Aug-11) GCC Water (Aug-11) GCC Roads & Railways (Aug-11) GCC ICT (Jul-11) GCC Airports (Jul-11) GCC Power (Jul-11) Abu Dhabi Jordan Qatar Algeria KSA Syria Real Estate Dubai Kuwait U.S.A Egypt Lebanon Banking Stress Testing Kuwait Banks (May-11) GCC Banks - Done with Provisions? (Jan-10) Shelter in a Storm (Mar-09) Banking Sweet spots (Apr-08) Oil & Gas Diworsification: The GCC Oil Stranglehold (Jan-09) Periodic Research Monthly Regional Petroleum Projects Commentary Weekly Real Estate Market Commentary Daily Oil & Gas Bulletin Strategic Research GCC Outlook 2H11 (Aug-11) What to expect in 2011 (Jan-11) The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) What to expect in 2010 (Jan-10) What is left for 2009? (Sept-09) Missing the Rally (Jun-09) This Too Shall Pass (Jan-09) Fishing in Troubled Waters (Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07) Periodic Research Annual GCC Market Outlook Quarterly Thought Speaks GCC Equity Funds GCC Corporate Earnings GCC Equity Research Statistics Monthly Market Review Weekly MENA Market Intelligence KSE Market Review International Market Update Daily Markaz Daily Morning Brief Markaz Kuwait Watch Daily Fixed Income Update Company Research (See the list attached) RESEARCH ... Conventional -5 .50% Gulf - KD Bond Fund -2 .60% -0 .01 -0 .19 Money Market No Of Funds Weighted Return (2010) GCC - Conventional 0.64% CAAM - SAR Money Market Fund 0.45% 2.45 -0 .95 GCC - Islamic 0.44%... Kuwait (Feb-08) To Leap or To Lag: Choices before GCC Regulators (Apr-07) GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06) Sectors Capital Markets Infrastructure GCC Ports (Aug-11) GCC Water... Fund -8 .65% N.A N.A UAE - Conventional 13 -4 .12% Makaseb - Emirates Opportunities Fund 3.91% -0 .09 0.26 UAE - Islamic -3 .81% NBAD - UAE Islamic Fund 4.17% -0 .05 0.67 Qatar - Conventional 27.59%