HSBC Global Asset Management MENA fund

HSBC Global Asset Management this week launches the HSBC GIF Middle East and North Africa (MENA) fund.

The fund was initially scheduled for launch in October 2008 but was postponed until now amid the extreme global market volatility at the end of 2008 and early 2009.

With a more secure outlook for the region, HSBC Global Asset Management considers now is a more suitable time to launch this fund. The fund is managed by Andrea Nannini and his team at Halbis, the active management specialist within HSBC Global Asset Management.

Nannini said: "Despite the recent rebound, stock prices are still significantly below their pre-crisis levels and offer very compelling valuation levels. The fundamental outlook for the region is rapidly improving on the back of higher commodity prices, strong domestic demand and pro-active government policy. Therefore, we consider now is an excellent entry point for long term investors."

The HSBC MENA fund will form part of HSBC's flagship Global Investment Funds SICAV, domiciled in Luxembourg and available for sale in more than 35 countries. The fund will have UK distributor status.

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$50 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.

The fund will typically hold around 50-60 stocks. 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.

Nannini said: "The MENA region is expected to benefit from continued rapid economic growth and increasing liberalisation of the financial markets. Many of these countries are positioned to benefit from a rebound in 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.

Nannini's team also manages HSBC's successful New Frontiers fund, a specialist fund that currently has around 50% exposure to the MENA region. The New Frontiers fund was launched on 4 February 2008. Year to date (to end August 2009) this fund has returned 37.77% in USD terms, compared to the MSCI Frontier Markets index of 19.96%. (Source: MSCI Barra, performance up to 31.08.2009, total return, net dividend index performance).

HSBC Global Asset Management is among the world's largest managers of emerging markets assets, with USD69 billion assets under management in this asset class, as at end of June 2009.