The investment arm of the National Bank of Abu Dhabi’s (NBAD) MENA bond fund, which is five weeks old, is investing in a range of government and corporate bonds, with an average credit grade between AA- and BBB.
The NBAD MENA Bond Fund is a Ucits IV clone of the firm’s existing Cautious Income Fund and part of a US$700 million strategy the firm launched nearly three years ago. The latest version was launched into the UK, Europe and Switzerland on 19 March, 2013.
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Mark Watts, head of fixed income at the asset management group, explained that rather than the bank seeding the fund it quickly raised US$110 million in assets under management, largely from five or six European investors, and continues to attract inflows of around US$1 million per day.
The NBAD MENA Fund’s current regional allocation is focused, centred on the United Arab Emirates (81.7%) with the rest investing in Saudi Arabia, Turkey and Oman, with just under 6% in cash.
In terms of its credit breakdown, 29.3% is in A-rated bonds, 28.3% in BB, 17.9% in B, 12.4% in BBB and the balance, 12.1%, in AA-rated securities.There are still risks attached with any MENA investment with Watts listing volatility, choppy markets, social and political problems and a possible currency crisis brewing for avoiding investment in certain countries, naming Egypt as one of them.
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