HSBC launches Middle East and North Africa (MENA) Fund

HSBC Global Asset Management is to launch the HSBC GIF Middle East and North Africa (MENA) fund by end October, subject to regulatory approval.

The fund will form part of HSBC's flagship Global Investment Funds SICAV, domiciled in Luxembourg and available for sale in more than 35 countries. It will be managed by Andrea Nannini and his team at Halbis, the active management specialist within HSBC Global Asset Management.

Nannini's team also manages HSBC's successful New Frontiers fund, a specialist fund aimed at institutional investors, which currently has around 45% exposure to the MENA region. The New Frontiers fund was launched on 4 February 2008.

Benchmarked against the MSCI Arabian ex-Saudi Arabia Total Return Index, the HSBC GIF MENA fund will invest in companies from this region with a market capitalisation of greater than US$100 million. Countries within this universe include United Arab Emirates, Oman, Kuwait, Bahrain, Egypt, Jordan, Qatar, Lebanon, Morocco, and Tunisia. The fund can hold up 10% of its portfolio in Saudi Arabia.

HSBC Global Asset Management already has an established asset management business in Saudi Arabia, managing almost US$6 billion in Saudi equities. This business is the largest in the country for domestic investments and offers the largest mutual fund range.

When constructing the MENA portfolio, Nannini and team will apply a principally bottom up, valuation driven approach, choosing stocks that display strong and sustainable business models, good corporate governance and attractive valuations. The fund will typically hold around 50-60 stocks.

Nannini said: "The MENA region offers stock market exposure to the next generation of emerging markets. These markets are expected to benefit from continued rapid economic growth and increasing liberalisation of the financial markets. Many of these countries are positioned to benefit from high and sustained commodity prices, in particular those within the Gulf region. Additionally, ambitious infrastructure development programmes are underway within the region, which provides an exciting investment theme."

He added that within many of these markets, the companies were still undiscovered and under researched, thereby offering the potential to find good valuation anomalies amid individual stocks.

Minimum investment for the retail share class is $5,000 and institutional share class is US$1million. The annual management fees are 1.5% and 0.75% for retail and institutional investors respectively.