INVESTMENT OVERVIEW - FEBRUARY 2021 - SALAMA Islamic Arab Insurance ...
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FEBRUARY 2021 INVESTMENT OVERVIEW
February 2021
Strong foundation for a better future
SALAMA - Islamic Arab Insurance Company is the world’s largest and oldest Sharia’h compliant Takaful
solutions provider listed in Dubai Financial Market with a paid up capital of AED 1.2 billion. SALAMA has
been a pioneer in the Takaful Industry right from its incorporation in 1979 to its present day distinction as
preferred Takaful provider.
SALAMA serves both individual and institutional customers through its extensive global network. At present,
with its subsidiaries and associates companies, SALAMA is providing solutions to customers in the UAE,
Saudi Arabia, Egypt, Senegal, Algeria and Jordan with plans to further expand its geographical reach to all
the GCC states, South East Asia, Far East and eventually Europe.
SALAMA’s stability and success can be attributed to the strategy of keeping customers and partners at the
heart of business and staying true to its values and principles. SALAMA has always designed and developed
solutions that meet the ever changing demand of customers. This has given SALAMA the solid reputation of
providing the most competitive and diverse Takaful solutions.
As the UAE’s specialized Takaful Company, SALAMA offers a comprehensive range of Family, General and
Health Takaful solutions to Individuals and Corporates. Our High credibility, reputation for quality, high
standards of services and access to Takaful’s best practices has won SALAMA - “FAMILY TAKAFUL COMPANY
OF THE YEAR” Award at Middle East Insurance Award 2015, taking us one step further in our endeavor to
remain Takaful Operator of choice.
1
February 2021
Sharia’h Supervisory Committee
SALAMA has a Sharia’h Supervisory Committee, which is an independent board of qualified
scholars of international repute.
The members of this Committee are:
Dr. Mohamad Daud Bakar:
He received his first degree in Shari’ah from University of Kuwait and a Ph.D. from University
of St. Andrews, United Kingdom.
Dr. Amin Fateh:
He has Masters in honorable Hadith from the University of Jordan, and a Ph.D. in Islamic
studies from the University of Birmingham in Britain.
Dr. M. A. Qattan:
He has a Ph.D. in Islamic Banking from Birmingham University, UK and a BA in Islamic
Economics from Al-Imam University in Riyadh, Saudi Arabia.
2
February 2021
Market Commentary
On macro front, consensus is raising their global GDP growth estimates, as YTD activity indicators point
to resilience in global industry, surge in US retail spending and further upside inflation surprises. Also,
the pandemic infection rate is on a decline after reaching a peak of 860,000 on January 7, daily global
new infections now stands just under 400,000. This decline sets the stage for normalization of activity
as targeted restriction can be calibrated alongside a gradual move towards mass vaccination. We do
anticipate healthy balance sheet for consumers, including elevated saving rates- along with flood of
government support in pipeline, and low borrowing cost should provide ample ammunition for consumer
spending/leisure/travel for this year.
In Credit markets- We expect to see higher yields and a steeper curve over the medium term, markets are
now pricing a full hike by 1Q23 and over 50bp of hikes by early 2024. For IG, our preference to stick to the
front end and belly of the curve. Similarly, we continue to see better value in the high step-up perps offer
2.5-3.5% yields but having 3-5yr effective duration to call date. We also continue to like high yield, as we
expect to see bullish curve steepening with 3-5y BB/B paper outperforming. We expect Sukuk curve to
tighten as the demand for Sukuk continues and has become a priced possession to hold. In short, there’s
not enough sukuk to go around!
Oil stood at $63.8/bbl as we write, with the OPEC+ grouping is currently holding back around 8.2 mio
bpd from the market. Although aviation fuel demand remains low (we expect this to be in positive delta
versus 2020), US inventories are back to five-year average and short term brent futures contracts remain
in backwardation. Given the YTD rally, we expect to see some volatility in the market , and for oil to
continue higher from here we view that, a) demand has to come back pretty substantially and/or b) OPec
has to stay put with the production cuts in the near term.
3February 2021
Funds Performance Sheet
Fund Performance in Percentage %
Fund size in Year wise Cummulative
Fund Month
Risk (1) ISIN Code / millions Fund Year to
Fund Name Asset Class Inception to Since Annualized
Profile Bloomberg Ticker (All Share Currency Date 2020 2019 2018 3 years 5 years since
Date Date inception
Class) inception
A ALGCCTE:AB AlAhli GCC Trading Equity Fund 273.39 SAR Equities Oct-05 2.50% 2.50% 2.45% 16.01% 6.25% 29.15% 41.24% 11.14% 0.69%
A ALSATRE:AB AlAhli Saudi Trading Equity Fund 922.52 SAR Equities Jun-98 4.22% 3.97% 6.88% 14.70% 7.35% 36.70% 60.68% 1032.25% 11.25%
A AHNRAMI:AB AlAhli North America Index Fund 292.80 USD Equities Dec-92 0.83% 1.02% 23.25% 28.49% -4.58% 52.28% 103.45% 566.80% 6.96%
(Managed by NCB Capital)
A GB00BLD0QD87 OGM Oasis Crescent Global Equity "A" ACC 258.34 USD Equities Dec-00 1.82% 2.57% 6.50% 19.82% -10.92% 17.20% 39.50% 297.40% 7.05%
A GB00BLD0R249 OGM Oasis Crescent Global Property Equity "A" ACC 90.43 USD Real Estate Sep-06 1.51% 2.19% -11.10% 14.43% -16.31% -4.80% 2.40% 23.70% 1.48%
B GB00BLD0QS31 OGM Oasis Crescent Global Income "A" ACC 51.51 USD Sukuk Apr-10 -0.11% 0.36% 5.20% 7.76% -0.55% 13.90% 19.30% 45.20% 3.48%
(Managed by OASIS Global Management)(2)
B LU1150255971 BNP Paribas Islamic Fund Hilal Income "C" (USD) ACC 17.03 USD Sukuk Jan-09 -0.63% -0.48% 6.12% 9.29% -0.83% 16.03% 19.18% 65.13% 4.24%
(Managed by BNP PARIBAS Asset Management)
A GB00B1436X66 Emirates Mena Opportunities "A" ACC(3) 42.09 USD Equities Apr-06 -1.07% 2.08% 3.18% 3.36% 6.28% 10.28% 37.14% 50.22% 2.78%
B GB00B1224310 Emirates Global Sukuk "A" ACC 162.24 USD Sukuk Apr-10 0.01% 0.40% 5.10% 10.93% -0.50% 16.23% 22.94% 56.61% 4.21%
A LU1484867434 Emirates Islamic India Equity Fund 24.80 USD Equities Nov-16 0.97% 1.83% -7.99% 16.21% 50.72% 10.00%
C JE00B5T1J560 Emirates Islamic Money Market "A" ACC 320.79 USD Money Market Apr-10 0.03% 0.08% 1.49% 2.35% 1.88% 5.16% 7.16% 11.99% 1.05%
(Managed by Emirates NBD Asset Management)
A IE00B3ZL9H82 Comgest Growth Europe S (USD) ACC 49.03 USD Equities Dec-10 1.31% -1.98% 21.42% 33.37% -9.53% 44.22% 77.04% 164.85% 9.99%
(Managed by Comgest Asset Management International)
B AEDFXA1W2ZD7 Mashreq Al Islami Income Fund "D" (USD) ACC (3) 204.78 USD Sukuk Jun-09 -0.63% -0.02% 1.93% 9.30% -0.81% 12.46% 18.39% 28.30% 2.15%
(Managed by Mashreq Asset Management)
A LU0792757196 Templeton Shariah Global Equity "A" (USD) ACC 85.60 USD Equities Sep-12 3.07% 4.01% 0.81% 14.37% -13.92% 10.13% 50.82% 47.80% 4.72%
B LU0792756115 Franklin Global Sukuk Fund "A" (USD)ACC 303.20 USD Sukuk Sep-12 -0.45% -0.23% -2.66% 13.71% -2.53% 16.18% 21.33% 31.40% 3.28%
(Managed by Franklin Templeton Investments)
A IE00BYMM2054 Old Mutual Global Islamic Equity Fund "D" (USD)(4) 112.40 USD Equities Mar-13 4.38% 4.60% 8.80% 23.90% -7.41% 34.77% 135.30% 11.29%
(Managed by Old Mutual Investment Group)
B LU1435409286 Azimut Islamic Global Sukuk Fund 673.00 USD Sukuk Dec-13 0.17% 0.71% 4.30% 8.34% -0.02% 14.05% 27.06% 3.36%
(Managed by Azimut Group)
(1)
A = Aggressive, (1) B = Balanced, (1) C = Conservative
(2)
The Fund house manages Accumulation Share Class which is offered by SALAMA. The 3yrs, 5yrs and SI performance of above funds are of Distribution Share Class
(3)
The fund has launched “D” share class on Dec 6, 2012 which is offered by SALAMA. The 5 years, and since inception performance is of “B” share class
(4)
The Fund house manages “D” Share Class, launched on February 2017, which is offered by SALAMA. The 3yrs, 5yrs and SI performance of above funds are of Strategies which commenced in March 2013.
4February 2021
SALAMA SECURE
Fixed Income STRATEGY
Portfolio
February 2021
Fund Market Commentary
It was nothing short of a blood bath for rates in Feb. Overnight, 10-year US Treasury spiked to 1.6% in the last week of Feb
before re-tracing to ~1.4% by the end of the month, but it was still 51bps wider year to date as markets continued to price
in higher probability of not only growth picking up, but also inflation. Our portfolio erased c.30 bps of unrealised gain THEORETICAL RISK & REWARD INDICATOR
driven by a mix of HY and IG names in Feb. We see higher yields and a steeper curve over the medium term. Markets are
now pricing a full hike by 1Q23 and over 50bp of hikes by early 2024. For IG, our preference is to stick to the front end and Lower Risk Higher Risk
belly of the curve, stay put for now. We will probably average down on the long end (Saudi Electricity 2043), as it looks to Lower Rewards Higher Rewards
have consolidated given the intense movement in the yield curve. SECO 2043 are the most resilient in the Sukuk space,
and are well owned. Although GCC IG credits continue to offer spread pick up over like- rated US and Asian credits, we
note that it has tightened a lot since Q4 last year and performance here on is a function of USD trajectory and oil prices.
Similarly, we continue to see better value in the high step-up perps that offer 2.5-3.5% yields but that have a 3-5yr
effective duration to call date. We also expect to see bullish curve steepening with 3-5y BB/B paper outperforming. Our
view on the market is that rate shock, was flagged by the investors as the biggest risk for the market since Q4 of last
year. Once this is behind us, there appears to be no obvious negative catalyst on the horizon to worry about. Instead,
1 2 3 4 5
over the next few months the full roll out of vaccination program and re-opening of economy will see an economic
bounce back, albeit at a slower pace . As for as GCC/MENA investors are concerned, hunt for yield will likely continues,
avoiding the duration. We expect Perps esp from the financial space to flood the market in Q2 , and we expect it to be
well received. We note that Sukuk curve has tightened YTD more than the conventional ones, and we expect this
pattern to follow, as the demand for Sukuk continues due to lack of supply and hence, has become a precious
procession to hold. Overall, a month of tantrums from Bond market, and Fed seems to be unassuming (for now). Let's
brace for more duration risk!
Fund Details Portfolio Country Weights
Net Asset Value (Per unit) 109.04 YTM 5.1%
Investment Denomination USD/AED Average yearly Coupon 5.3% Qatar 2%
Asset Class Sukuk Duration (Years) 6.1
Geography Global Avg. Rating BBB- Saudi
35%
Leverage (Debt/Equity) 0 Benchmark SPBDSMNT Index Arabia
Relative Performance
UAE 63%
Sector Allocation
Retail 7%
Trade and
Port
10%
Sovereign
/GRE
10%
Utilities 15%
Financials 22%
Real Estate 36%
Return Statistics Credit Rating
Weekly MTD QoQ Since Inception YTD 1-Year
NR 5%
Portfolio -0.44% -0.29% 2.20% 9.04% 0.31%
Benchmark -0.46% -0.35% 0.60% 1.64% -0.14% A+* 5%
Relative Performance 0.02% 0.06% 1.60% 7.40% 0.45%
BB 10%
Top Five Holdings Top Five Yield Wideners/Worst performers (February)
BBB 21%
Saudi Electicity (2043/2030) 15% Damac (2022) 135 bps
NCB Perp (2026) 12% GFH Sukuk (2025) 51 bps A- 28%
Emaar (2029) 10% DAE Sukuk (2026) 34 bps
B-/B 31%
DP World Perp (2025) 10% Emaar (2029) 25 bps
Damac (2022) 9% Saudi Electricity (2030) 16 bps
Holdings' Ownership Structure Risk Metrics Duration
Sovereign / Supra National 5%
Quasi Sovereign 5% Less than 1
> 50% Government Ownership 2% 7%
yr
< 50% Government Ownership 43% 50%
Privately Held 45% 54% Greater
31%
than 5 yrs
This document is provided for informational and
illustration purposes only. It does not constitute a One to
solicitation, recommendation or offer to buy or sell Five years 62%
any investment product or subscribe to any Investment Grade Non-Investment Grade
investment management advisory service.Past
performance as illustrated herein is not a
guarantee of future returns. * Underlying entity is
5Top Five Funds February 2021
YTD Performance - 2021
Risk (1) ISIN Code / Fund size in million Fund Year to
Fund Name Asset Class Fund Inception
Profile Bloomberg Ticker (All Share Class) Currency date
A IE00BYMM2054 Old Mutual Global Islamic Equity Fund "D" (USD)(4) 112.40 USD Equities Mar-13 4.60%
A LU0792757196 Templeton Shariah Global Equity "A" (USD) ACC 85.60 USD Equities Sep-12 4.01%
A ALSATRE:AB AlAhli Saudi Trading Equity Fund 922.52 SAR Equities Jun-98 3.97%
A GB00BLD0QD87 OGM Oasis Crescent Global Equity "A" ACC 258.34 USD Equities Dec-00 2.57%
A ALGCCTE:AB AlAhli GCC Trading Equity Fund 273.39 SAR Equities Oct-05 2.50%
(1)
A = Aggressive, (1)
B = Balanced, (1) C = Conservative
MTD Performance for February 2021
Risk (1) ISIN Code / Fund size in million Fund Year to
Fund Name Asset Class Fund Inception
Profile Bloomberg Ticker (All Share Class) Currency date
A IE00BYMM2054 Old Mutual Global Islamic Equity Fund "D" (USD)(4) 112.40 USD Equities Mar-13 4.38%
A ALSATRE:AB AlAhli Saudi Trading Equity Fund 922.52 SAR Equities Jun-98 4.22%
A LU0792757196 Templeton Shariah Global Equity "A" (USD) ACC 85.60 USD Equities Sep-12 3.07%
A ALGCCTE:AB AlAhli GCC Trading Equity Fund 273.39 SAR Equities Oct-05 2.50%
A GB00BLD0QD87 OGM Oasis Crescent Global Equity "A" ACC 258.34 USD Equities Dec-00 1.82%
(1)
A = Aggressive, (1)
B = Balanced, (1) C = Conservative
6Top Five Funds February 2021
Top 5 “A” Funds
Risk (1) ISIN Code / Fund size in million Fund Year to
Fund Name Asset Class Fund Inception
Profile Bloomberg Ticker (All Share Class) Currency date
A IE00BYMM2054 Old Mutual Global Islamic Equity Fund "D" (USD)(4) 112.40 USD Equities Mar-13 4.60%
A LU0792757196 Templeton Shariah Global Equity "A" (USD) ACC 85.60 USD Equities Sep-12 4.01%
A ALSATRE:AB AlAhli Saudi Trading Equity Fund 922.52 SAR Equities Jun-98 3.97%
A GB00BLD0QD87 OGM Oasis Crescent Global Equity "A" ACC 258.34 USD Equities Dec-00 2.57%
A ALGCCTE:AB AlAhli GCC Trading Equity Fund 273.39 SAR Equities Oct-05 2.50%
(1)
A = Aggressive, (1)
B = Balanced, (1) C = Conservative
Top 5 “B” Funds
Risk (1) ISIN Code / Fund size in million Fund Year to
Fund Name Asset Class Fund Inception
Profile Bloomberg Ticker (All Share Class) Currency date
B LU1435409286 Azimut Islamic Global Sukuk Fund 673.00 USD Sukuk Dec-13 0.71%
B GB00B1224310 Emirates Global Sukuk "A" ACC 162.24 USD Sukuk Apr-10 0.40%
B GB00BLD0QS31 OGM Oasis Crescent Global Income "A" ACC 51.51 USD Sukuk Apr-10 0.36%
B AEDFXA1W2ZD7 Mashreq Al Islami Income Fund "D" (USD) ACC (3) 204.78 USD Sukuk Jun-09 -0.02%
B LU0792756115 Franklin Global Sukuk Fund "A" (USD)ACC 303.20 USD Sukuk Sep-12 -0.23%
(1)
A = Aggressive, (1)
B = Balanced, (1) C = Conservative
7www.salama.ae
4th Floor - Spectrum Building, Oud Metha - Dubai, U.A.E.
P.O.Box: 10214, Tel: 800725262
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