The asset management group of NBAD bank (NBAD AMG), backed by the government of Abu Dhabi, has a fixed interest team headed by Mark Watts, who will run NBAD MENA Bond fund when it goes live towards the end of Q3.
Watts has 23 years of experience in the fund management industry, having previously been head of asset management for a Qatari-backed Shari’a compliant bank based in London. He was also head of global fixed income at Aviva Investors and worked for 18 years at Baring Asset Management.
The fund’s portfolio, to be daily priced with $ and £ shares classes, will have a top down approach blended with bottom up expertise to achieve multiple sources of alpha and a higher information ratio. Only those bonds which benefits from a high degree of government ownership will be selected and the remit allows for anything within the MENA region to be purchased, though in practice the majority of issuance emanates from the UAE. Minimum investment is $10,000.
Watts said that there are good reasons to have overweight bond exposure in the Middle East, one key point being that the credit levels are often higher than the international average. According to a report by Standard & Poor’s Ratings Services, banks in the Gulf Cooperation Council (GCC) region have capitalisation that generally exceeds their international peers.
Another advantage lies in the lack of correlation with the economic problems in Europe, to which the classic global fixed income fund, that many advisers recommend, is exposed, Watts said.
A proactive approach is another feature of the way the fund will be run which not only involves regular company visits but also a risk averse monitoring which led, for example to Watts removing from an existing portfolio its entire 8% exposure to Bahrain at the end of Jan 2012.
