Three years on since widespread demonstrations began to rock the Middle East, the spectre of the Arab Spring continues to hold the world’s attention with the latest developments in Egypt.
From an investor standpoint, some generalists and emerging market managers have withdrawn from these markets but what about the dedicated MENA equity managers? How have they fared?
In the Citywire database, there are 14 fund managers with a dedicated MENA equity fund and a track record charting back to November 2010 – just prior to tensions rising across parts of the Middle East and North Africa.
Over this 30-month period to the end of May 2013, the average manager has returned 7.1%, while the most commonly held benchmark, the S&P Pan Arab Composite TR, rose 13.67% in US dollar terms.
Only six of the 14 managers surpassed the benchmark performance, while three of these achieved total returns of 20% or greater. So who are the standout performers in this tumultuous market?
Top three performers
3. Ghadir Abu Leil Cooper, Barings
Fund: Baring MENA A USD Acc
Total return (November 2010-May 2013): 22.22%
Posting the third strongest performance over this period is Barings’ Ghadir Abu Leil Cooper, who has focused her 37-stock, $10 million fund on the United Arab Emirates (21%) and Turkey (18%). This is while also having significant geographic exposure to Qatar (18%) and Saudi Arabia (16%).
The bulk of the fund’s sector exposure is made up of financial stocks, which comprise 53% of the portfolio. In fact, within the top 10 holdings at the end of April 2013, the only non-banking stocks were Dubai-based companies DP World, a port terminal operator, and Emaar Properties.
2. Nina De Martinis-Majstorovic, Amundi
Total return (November 2010-May 2013): 23.51%
Amundi’s Nina De Martinis-Majstorovic, who has run the $28 million fund since May 2008, previously pin-pointed Iran as the greatest risk to her positioning and instead has focused her strategy on Saudi Arabia (49%), UAE (18%) and Kuwait (13%).
De Martinis-Majstorovic said in her May update that an overweight to telecoms, consumer and healthcare stocks in Saudi Arabia, coupled with financials and construction companies in the UAE had been the main drivers of outperformance.
1. Ibrahim Masood, Mashreq
Fund: Mashreq Arab Tigers
Total return (November 2010-May 2013): 32.69%
Leading the pack and boasting the only performance above the 30% mark is Mashreq’s Ibrahim Masood. The Dubai-based manager has led on the Dublin-domiciled fund since launch and echoes his peers with a strong allocation to the Gulf nations of Qatar, the UAE and Saudi Arabia.
Where Masood differs from the competition is he retains a 13% allocation to Egypt, while also holding 29% in cash at the end of May. Masood said recent outperformance can be attributed to an overweight to consumer stocks, which is underpinned by governments in the region increasing citizen’s purchasing power.