Markaz announced that its range of international products outperformed their benchmarks for the year ended 2007, despite a turbulent year for international markets. Mr. Gopal Menon, Executive Vice President of International Investments said “Despite a fairly turbulent year in international markets, Markaz was, once again, able to achieve superior performance through its dynamically managed asset allocation methodology.
Markaz adapted to the situation and implemented tactical asset allocation, reducing exposure to the US, the market most affected by the sub prime issue, as well as Europe and Japan and focusing on thematic investments and emerging markets; the International Investments team managed to avoid riskier situations and has generated alpha. Markaz was able to outperform its benchmark by a clear margin of more than 8%. ” Since its inception in May of 2007, Markaz's IPO/Pre-IPO Program has produced enviable results. In only its first seven months, the program accomplished returns of 23% due to the selection of profitable investment opportunities across the globe, mainly in the US, GCC/MENA, and Asia. Markaz's flagship international fund, Atlas Diversified Class, which invests in diversified asset classes and geographically diversified markets, produced superior returns due to its dynamic asset allocation and emphasis on specialized investment themes and emerging markets. Also, the Fund increased its exposure to Kuwait by 10%, to capitalize on the local stock market's growth, which proved beneficial. The fund posted returns of 17.90%, significantly surpassing Markaz Global Securities Index, its benchmark. MGSI, which performed at 10.67% for the same period is an index compiled by Markaz and constructed as follows: 15% KIC index, 25% S&P500 index, 20% MSCI Europe index, 15% Lehman Brothers Aggregate Bond index, 10% HFRX Global Hedge Fund index, 5% Russell 2000 index, 5% 3-month KWD rates and 5% US 3- month treasury bill. In spite of an unstable market in 2007, Atlas Fund of Hedge Funds recorded above average returns of 7.03%, in line with our expectations for the year. Atlas ETFs Program, which invests in global indices and sectors, posted remarkable returns. The program outperformed the MSCI World Index, by twice as much, achieving 14.18% for the year. The ETF program has recently attracted considerable interest from clients since it is regarded by many investors as a safe haven at times of market uncertainty and stock-picking difficulty. Commenting on the previous year, Mr. Menon said “The past year presented many difficulties, ranging from credit crunch/sub prime issues to fears of a looming US recession that rippled its way across the globe affecting most major indices. The months between May and August were the most troublesome since adverse conditions began to escalate and uncertainty took over. Although by end of August the markets got a respite due to the unexpected action from the Fed, the rally did not last till the end of the year. November and January, which are historically benign months, did some inflicting damages on US markets on account of the disclosures of the heavy sub prime losses suffered by certain banks which gradually shook the Emerging markets as well.” As for the outlook on international markets, Mr. Menon said "For 2008, we expect volatility to continue in global equity markets, especially in the first half of the year. However, more measures to be taken by the US Fed to reduce rates aggressively to stave off recessionary trends together with banks successfully completing recapitalization and commodity prices easing, will create a better environment for investment. Emerging markets will most likely see a rise in inflation and a slower GDP growth; however, stock markets are expected to contribute reasonably good returns in lower double digits due to multiple expansions. Overall, we predict that the global markets will see returns in the 8-10% region.” Mr. Menon hinted at upcoming products; “In line with market demand, Markaz will be launching two products/funds based on Thematic and Islamic investments where great potential is seen in 2008 and onwards.” -Ends- Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1.4 billion as of September 30, 2007, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd. Photo Caption: Mr. Gopal Menon, Executive Vice President of International Investments and Investment Advisory, Markaz