BLOMINVEST Saudi Arabia (BSA), announced today the launch of the Blom MSCI Saudi Arabia Select Min Vol Fund; a public, open-ended, Shariah-compliant investment fund established in accordance with the Investment Fund Regulations and approved by the Capital Market Authority in Saudi Arabia.
The Blom MSCI Saudi Arabia Select Min Vol Fund is the first Strategic Beta fund in the region developed as a result of the collaboration between BSA and MSCI.
Strategic beta funds identify and exploit specific return drivers (also known as factors) in a transparent and rule-based passive framework.
Abdullah Al Rashoud, CEO of BSA, views the launch as another milestone in the development of BSA’s product offerings noting that “The regional and local markets will soon catch up with the rapid global rise in strategic beta investing. We introduced this globally adopted innovative product to the local market in order to provide investors with additional tools to help them reach their investment objectives.”
BSA opted for the low volatility factor to drive its first strategic beta fund. The strategy seeks to minimize volatility by adopting MSCI’s minimum-variance optimization techniques. Over the long term these strategies have historically improved the risk/return profile of market capitalization weighted indices.
Commenting on the launch, Michel Chikhani General Manager of BLOM Group’s Asset Management business said “we are proud to launch the first of a series of such funds and it’s been our pleasure to collaborate with MSCI, one of the top and most-reputable index providers on this project. MSCI is best positioned to add value given their extensive experience with international asset managers in providing various factor-driven strategies, in addition to MSCI’s impressive track record and profound understanding of Emerging Markets.
To that Robert Ansari, Executive Director and Head of the Middle East MSCI further added, “We are pleased that Blominvest has selected the MSCI Saudi Arabia Min Vol Shariah compliant index for the launch of their fund. Over recent years the demand for transparency and governance in factor investing is on the increase and with more than 40 years’ experience, and more than $184billion[1] in assets benchmarked to our Factor Indexes globally, MSCI is a leader in this space. This is an exciting and transformative time in the Kingdom, and MSCI are proud to be part of this.”
Institutionally, “These instruments are witnessing the largest growth in the global investment management industry, added Marc El Hage Head of Business Development at BSA. “They are being adopted by institutions ranging from pension funds to endowments and insurers across the globe.”
Anticipating the behavior of the minimum variance strategy amidst the prevailing macroeconomic scene; Bechara Bardawil, Head of Quantitative Strategies at BSA highlighted that “among the various objectives of Vision 2030 is reducing the Saudi economy’s dependence on oil. During this process the market constituents might witness declining inter-correlations, thus potentially further improving the performance of the benchmark and, by extension, the fund by reducing the relative volatility (variance).”
“Strategic Beta is a projected development of the investment methodologies adopted by BSA, added George Hanna, Head of Asset Management at BSA. “We are a process driven Saudi investment management firm, we therefore believe we are best positioned to provide investors with standardized quantitative solutions on the local market at par with those available internationally. BSA aims to be the leader of this innovation and future additional offerings under within the spectrum of Strategic Beta.”
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