Gulf Investment Fund turns to Saudi stocks to drive growth 

GIF

• UK-listed fund is majority-owned by Qatar Insurance Company
• GCC weighting in MSCI Emerging Markets to keep rising, says boss 
• Saudi accounts for almost 60% of GIF’s portfolio, up from 30% in 2022

The Middle East’s stock markets have struggled to attract Western portfolio investors, despite strong performances. Gulf Investment Fund (GIF), which has $83 million invested across the seven markets, is seeking to change that.

The fund, which is listed on the London Stock Exchange, recorded a net asset value increase of 15.4 percent for the year to June 30, 2022 – outstripping the wider S&P index by 8.4 percent.

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Anderson Whamond, GIF’s chairman, said it had delivered returns of 115.6 percent in the five years to June 8.

Known as Qatar Investment Fund until its rebranding in 2017, GIF says it is the only closed-end UK-listed fund to invest exclusively in the GCC. Closed-end means that investors are tied in for a given period of time.

It is majority-owned by listed Qatar Insurance Company via a wholly owned subsidiary, Epicure Investment Management, and registered in the Isle of Man. GIF has 29 holdings: 19 in Saudi Arabia, four in Qatar, four in the UAE, one in Kuwait and one in Oman.

Whamond attributes the fund’s small size to the turbulent market conditions of recent years, the fund’s low profile, “concentrated” shareholder base and small size – a “chicken and egg scenario”, he told AGBI. “This is why we fall under investors’ radar.”

Whamond said the GCC’s weighting within the MSCI Emerging Markets Index, a core benchmark, has grown from 2.5-3 percent a few years ago to 7-8 percent and looks set to increase.

GIF thinks the weighting will rise to as much as 10 percent, “with more shares issued in the market and foreign flows in Saudi and elsewhere,” Whamond said. “So, people will need greater exposure.”

By the end of the first quarter, the fund had increased its exposure to healthcare, industrials – notably, a new investment in Abu Dhabi Ports Company – communications services and energy. It reduced investment in consumer staples, financial services and real estate, according to a Q1 trading report.

GIF aims to ramp up investment in banking and hydrocarbons – the fund has no direct exposure to the latter, said Whamond. The region’s rapid population growth makes domestic sectors such as tourism, construction, infrastructure, insurance and healthcare appealing. 

Another growth opportunity is Saudi Arabia. The portfolio has “historically been underweight Saudi versus the S&P index”, according to Whamond.

But within a year it has increased its exposure from around 30 percent to almost 60 percent – matching the index. The figure is expected to grow further given the opportunities in the kingdom.