The latest Fund Market Insight Report from Lipper for the GCC countries reveals that all 69 Lipper equity categories posted positive annual performances for 2009, with the exception of the 39 funds invested in Kuwait.

Kuwait funds lost 18.13 per cent on average during 2009, reflecting the weak performance of the Kuwait Stock Exchange, said the report.

Funds invested in emerging markets topped the annual ranking; Equity Russia returned 159 per cent, Equity Indonesia rose 124 per cent, and Equity Emerging Markets Latin America gained 104 per cent.

JPM Russia A Acc USD was the best performing fund registered for sale in the GCC over the year, returning more than 164 per cent.

Fourteen of the 20 top-performing funds available for sale in the region were invested in emerging markets, notably Russia, India, and Indonesia.

However, funds invested in the GCC lost momentum during the last quarter. Equity UAE fell by 16.35 per cent, Equity Kuwait lost 17.50 per cent, and Equity GCC decreased 8.44 per cent, due mainly to impact of the Dubai debt crisis on their annual performance. 

For GCC-domiciled funds, those invested in emerging markets also topped the rankings: Equity Emerging Markets gained 75.63 per cent, and Equity Asia Pacific ex Japan rose 62.24 per cent.
  Among GCC markets, the best performers were the 46 locally-domiciled funds invested in Saudi Arabia, increasing 30.44 per cent on average during 2009, benefitting from the Saudi Tadawul All Shares’ annual performance of 27.54 per cent - the best of the seven regional markets. SHC Saudi Equity, managed by Saudi Hollandi Capital, was the best performer among Saudi funds gaining 48.32 per cent during the year.

Bond funds increased 16.07 per cent over 2009, recording an impressive jump compared to the minus 10.19 per cent return posted the previous year, mainly on market conditions improvement. Globally, high-yield categories topped the ranking, benefiting from spread tightening.

The 214 Shariah-compliant funds registered for sale in the GCC increased 12.5 per cent during 2009, an improvement compared to the minus 28.57 per cent return recorded the previous year.  However, this jump was minimal compared to that of conventional funds which gained almost 36.50 per cent.

“Islamic funds did not benefit from the spectacular rise of emerging markets, since they do not invest heavily in those markets; being much more focused on the regional GCC markets, which witnessed a tough last quarter 2009 with the fallout of the Dubai World affair,” explained the report’s co-author, Mériéme Boutayeb, research analyst at Lipper.

Shariah-compliant equity and mixed asset funds were the best performers, gaining 18.48 per cent and 14.07 per cent on average, respectively, during the year. On the other hand, real estate funds ended the year in negative territory, losing 9.76 per cent over 2009. Again, Equity Kuwait was the worst performing category, decreasing 23.04 per cent.

Caam Saudi Fransi Al Fursan BRIC Equity Trading was the best performing Shariah-compliant fund during the year, gaining 106.11 per cent. This Saudi-domiciled fund benefited from significant exposure to the equity markets of Brazil, Russia, India, and China.

“With the bursting of the real estate bubble, coupled with different government stimulus programmes, the GCC region looks set to emerge stronger and quicker than other countries, with the potential to match the pace of other emerging markets,” stated Dunny Moonesawmy, Lipper’s head of Middle East Research and report co-author. 

“However, it has become even more important than before for investors to be careful in country and stock selection. The next few years should be beneficial for fund managers with stock-picking strategies, as they take advantage of local expertise and understanding of the different challenges and opportunities facing GCC countries and their companies to create value for their investors,” he added.-TradeArabia News Service