Launched on 30 August 2013, the new Fund provides access to the rapidly growing bond markets of the Gulf Cooperation Council (GCC) member countries to investors.
Over the last decade, the economies of the GCC countries have exhibited remarkably strong fundamentals and their bond markets have expanded significantly and are poised to become one of the fastest-growing bond markets in the world. They have strong balance sheets and have amassed considerable current account surpluses over the past decade.
The new Fund invests in fixed or floating-rate debt securities and obligations issued by government, government-related or corporate entities located in GCC member countries. It may also purchase similar securities and obligations issued by entities based in the wider Middle-East and North Africa (MENA) regions as well as supranational entities organised by several national governments, such as the International Bank for Reconstruction and Development. It seeks to maximise total investment return consisting of a combination of interest income, capital appreciation and currency gains in the long term.
Mohieddine (Dino) Kronfol, chief investment officer, Global Sukuk and MENA Fixed Income, Franklin Templeton Investments (ME) Limited, is the lead manager of the Fund. He is supported by portfolio manager Sharif Eid and senior research analyst Franck Nowak. Based in Dubai, the investment team is ideally positioned to provide broad research coverage for this rapidly growing, yet still under-researched area of the fixed income market.
Dino Kronfol commented: “The GCC region has some of the world’s strongest credit metrics and is endowed with 30% and 20% of the world’s proven oil and gas reserves, respectively. Regional debt markets have been developing rapidly over the past 10 years and have achieved scale in terms of market size, issuance volumes and trading activity.” He added: “We believe the outlook for regional debt markets is extremely positive as GCC countries continue to develop external as well as domestic money, bond and Sukuk markets. We expect GCC markets to continue delivering strong risk adjusted returns with low correlations to major fixed income and equity markets.”
In addition to their local understanding and insight, the investment team has access to multiple resources including: integration with the wider Franklin Templeton Fixed Income Group, a global leader in fixed income investing; oversight from the Franklin Templeton Investments Local Asset Management Group, a pioneer in locally managed portfolios governed by global quality standards; and risk management, compliance and operations support from Franklin Templeton Investments, a global investment manager.
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