Wealth Monitor_November 2015

TECHNOLOGY TRENDZ | Predictive Analytics

Past trends, like history, always serve as mix of products will entice consumers to SALES SUCCESS
a rich source of information that gives make a purchase. Active traders look at Fund managers can also use predictive
us some idea, though not incomplete, a variety of metrics based on past events analytics to get a sense of the
about what lies in the future. Such trends when deciding whether to buy or sell a creditworthiness of the existing and
assume greater significance when we security. Moving averages, bands and prospective customers. It will be helpful
need to make financial investments. If a break points are based on historical data, in targeting customers better. Fund
company has generated profits for past and are used to forecast future price managers can know the risk appetite of
several years, we cannot say for sure if it movements. a customer through predictive analytics.
will do so in future. However, at least we This along with other behaviour patterns
can be assured that the company has SELECTIVE PROBABILITIES of a customer can help in better pitching a
sound fundamentals and is backed by an Predictive analytics can be applied using relevant product.
experienced management. different kinds of ready software. As
predictive analytics software is easier Application of predictive analytics
WHAT’S NEXT to use, it is finding wide application in to customer data help fund managers
Predictive analytics involves the practice the financial services industry. Fund predict the churn of customers and also
of collating information from available managers find application of predictive segment them by profitability and size.
data sets with an idea of determining analytics in analyzing customer data Upon segmentation, the fund managers
patterns and also predict possible trends and for risk management by evaluating along with the marketing and sales team
and outcomes for future. The process internal and market data. Managers can can use technology to enhance marketing
cannot tell you with certainty what will use redemption data to drive informed campaigns and offer incentives to
happen but it can indicate what might decisions in the business. customers based on their segmentation.
happen with a degree of reliability after This can lead to better retention of
factoring in the risks and uncertainties. Take the example of FundGUARD. customers at lower rates.
Owned by Angoss, a Canada based
Predictive analytics can come handy
Predictive analytics involves the practice in distribution strategy and help sales
of collating information from available data managers to identify opportunities.
sets with an idea of determining patterns Asset management firms are integrating
and also predict possible trends and solutions based on predictive sales
outcomes for future intelligence into their wholesale
operations. Forward looking asset
The models of predictive analytics company, FundGUARD is a fully hosted management companies are increasingly 49
are used to predict future probabilities. and managed predictive sales analytics tapping the power of predictive analytics
In businesses, predictive analytics is solution for mutual fund distributors related to sales to quantify potential and
applied to analyze current data along with looking to increase assets under improve productivity of the team.
historical facts to understand customers, management while reducing redemption
partners, products, etc, in a better risk. Predictive Analytics have emerged The 2015 Mutual Fund Outlook report
manner. One can better spot risks and as a significant business opportunity for by Deloitte Centre for Financial Services
opportunities for the business. companies like IBM and SAP who offers talks about the increasing use of data
software for predictive analytics. analytics. According to the report,
According to Investopedia, predictive predictive analytics can be used to know
analytics is a decision making tool in Predictive analytics can align sales about such competitor products that are
a variety of industries. For example, as well as marketing strategies of a facing stress, to find out about possible
insurance companies examine policy fund according to segmentation and redemptions and identify opportunities
applicants to determine the likelihood redemption behaviour. This can also to gather assets. The financial services
of having to pay out for a future claim help a fund to know the likelihood of industry is turning competitive day by
based on the current risk pool of similar financial advisors’ buying or redeeming day and taking cues related to customer
policyholders, as well as past events in future. The sales and marketing teams data through predictive analytics can give
that have resulted in payouts. Marketers can accordingly sell a product or reduce funds a sense of the way customer may
look at how consumers have reacted to redemptions. This is a win-win situation for behave and be better prepared. While big
the overall economy when planning on both customers who get relevant products data has not been used in a significant
a new campaign, and can use shifts in and for companies that can look forward manner by financial services sector so far,
demographics to determine if the current to a long relationship with its customers. predictive analytics is an important step in
that direction.

November 2015 | www.wealth-monitor.com

DASHBOARD

DASHBOARD

The Dashboard section gives insight into a whole lot of regional and global financial
transactions including, but not limited to, IPOs, M&As, corporate earnings, banking, private
equity & venture capital deals, Sukuk issuance, crowdfunding deals, investment patterns,
sovereign wealth fund deals, among others. In this issue, Wealth Monitor gives a summary of
GCC markets during October, Mutual Fund Assets in GCC , estimated pension fund assets (mid-
2015), fund managers per country, asset weighted returns of funds, top five fund managers and

fund (AUMs) summary of KSA and UAE asset management industry.

5500 Markets in Numbers P.51

Tradepedia Analysis

Room for Growth P.52

Asset Management

A Coming Shift P.54

Mutual Funds

www.wealth-monitor.com | November 2015

DASHBOARD

Markets in Numbers

Volume Shockers Index Watch

Stocks that went up/down massively in volume terms (%) (Y T%DCYh)TaDnge

ADI

-1.94% QE
DFMGI -5.36%

-5.60%

EMIRATESNBD DUR TASI -12B.A0S9I%-11K.S3E0%
418.33% 14 1.74 % -12.99%
SHUAA SUDATEL WATANIYA
415.41% 50 5.4 6 % 18 .8 2 % QEWS Key Events to Watch For
DSI ALDAR SAIC 2 0 19 .11%
247.59% 161.95% 6 .9 5% QIBK
NBF 16 13 .4 9 %
8 5.3 6 % KCBK
6 77.8 2 %

TAKAFUL-EM SIB Falcom 30 NLCS Date Currency Data
-9 3 .2 1% - 9 8 .4 6 % -9 9 .53 % -9 9 .19 %

TABREED TAQA SIPCHEM DBIS
- 8 8 .9 6 % -9 5.54 % -9 8 .15% - 9 9 .0 8 %
AGTHIA SAIB
EMAARMALLS - 9 4 .2 4 % -9 7.6 1% MCGS
- 8 2 .9 6 % -9 7.4 2 %

DFM Abu Dhabi TASI Qatar Nov 1 CNY M anufacturingPM I
Nov 2 USD ISM M anufacturingPM I
Buzzing Stocks Nov 4 AUD TradeBalance
Nov 5 GB P BOEInflationReport
Stocks that saw the highest rise/fall in % change of price during the month
Nov 6 GB P M onetaryPolicySummary
No v 10 USD UnemploymentClaims
No v 11
Source: Tradepedia data as on October 26, 2015 GULFNAV No v 12 USD Non-FarmEmploymentChange
No v 16 CNY CPIy/y
33.42% No v 17
CNY IndustrialProductiony/y
TAKAFUL-EM No v 18 USD UnemploymentClaims
No v 19 CA D M anufacturingSalesm/m
33.11% No v 20 A UD M onetaryPolicyM eetingM inutes
No v 24 GB P CPIy/y
MAZAYA.DFM No v 26 USD CPIm/m
USD FOM CM eetingM inutes
18.06% No v 27 USD UnemploymentClaims

NCTH CA D CoreCPIm/m
USD PrelimGDP q/q
18.42%

GCIC

13.46%

BOS

11.33%

SAGRINSURANCE

38.79%

SRMG

31.78%

ARABIAN SHIELD

29.72%

QGTS

11.60%

QGMD

10.18%

VFQS

10.15%

DFM Abu Dhabi TASI Qatar

AMLAK NZD TradeBalance
USD UnemploymentClaims
-10.19%
GB P SecondEstimateGDP q/q 5511
DNIR

-8.40%

DFM

-7.74%

NBF

-34.27%

AKIC

-20.00%

ADAVIATION

-13.88%

ALTAYYAR

-17.60%

AL-AHLIA

-12.87%

CATERING

-12.48%

IH GS

-10.79%

GWCS

-7.46%

AKHI

-6.86%

NoAvnyeompinbioenrs,2n0ew1s5, re|sewarwchw, an.walyesias,lptrhic-ems, oor notihteor rin.cfoormmation contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not

constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

DASHBOARD | Asset Management

Room for Growth

A Snapshot of the asset management sector in KSA and UAE
Asset Weighted Returns

Among the various styles of funds in Saudi Arabia, Islamic equity funds gave the highest asset-weighted return of 0.9%, followed by
conventional equity funds and Islamic money market funds. Islamic equity funds generated an alpha of 5.4% Similarly in UAE,
Islamic Equity funds generated highest returns among the various other funds available. Islamic equity funds generated returns of
23% followed by conventional equity funds which generated returns of 21%. Specialized Islamic funds had (Real estate funds)
generated returns of 6.9% during the period July 2014 to July 2015.

KSA AWR UAE AWR

Funds 90.39% Funds 9.22%
7.68% 6.41%
Equity - Islamic -5.55% Islamic Equity 1.53%
Equity - Conventional 0.63% Conventional Equity 1.73%
Fixed Income - Conventional 0.76% Conventional Money market 0.29%
Money Market - Islamic -5.24% Islamic Fixed Income 6.93%
Money Market - Conventional 5.82% Islamic Money Market
Specialized - Islamic Islamic Specialized
Specialized - Conventional
Source: Zawya, Marmore Analysis
Summary

Saudi mutual fund AUMs amounted to USD 26.68bn or c.3.3% of 2015 GDP. This is spread among 141 funds, the majority of which were
in Islamic money market funds. In UAE, Asset under management (AUM) in mutual funds industry amounts to USD 1,264.8 Mn. Total
AUM can be further subdivided into Conventional Funds amounting to USD 829.8 Mn and Islamic Funds amounting to USD 435 Mn.

KSA Total Total Average Fund Size: $mn188*
No. of Funds: 142
(Conventional Funds + Islamic Funds) (Conventional Funds + Islamic Funds)
(Conventional Funds + Islamic Funds)
Fund Type AUM ($mn) 59 92
21 66
Equity 8,283
30 90 572
Fixed Income 66
52 Money Market 17,165 1 www.wealth-monitor.com | November 2015

Specialized 1,239

Total 26,753

Source: Zawya
*AuM and Average Fund Size may be rounded -off

DASHBOARD | Asset Management

UAE Total Total Average Fund Size: $mn 41*
No. of Funds: 31
(Conventional Funds + Islamic Funds) (Conventional Funds + Islamic Funds)
(Conventional Funds + Islamic Funds)
Fund Type AUM ($mn) 38
3 85
Equity 878 1 4
Fixed Income 40 40
Money Market 92 23
Specialized 254 23

Total 1,265

Source: Zawya
*AuM and Average Fund Size may be rounded-off

Top 5 Fund Managers

In KSA, NCB Capital was the leading fund manager (in terms of AUM) with USD 7.03 billion in assets (35% market share), followed by
Samba capital with USD 3.83 billion (19% market share) in assets under management. In UAE, Abu Dhabi Commercial Bank has the USD
374.15mn AuM and ranks 1st among the asset management firms. It is followed by Emirates NBD Asset management Limited with USD
339.5mn AuM. The top 5 companies based on the AuM have c.84% of the market share.

KSA UAE

Fund Manager Market No. of Average Fund Fund Manager Market No. of Average Fund
Share % Funds Size ($mn)* Share % Funds Size ($mn)*
Abu Dhabi Commercial Bank PJSC 29.60 8
NCB Capital 35 7 1,004.84 Emirates NBD Asset 46.7
Management Limited 26.90 6
Samba Capital and Investment 19 11 348.91 Abu Dhabi Investment Company 56.58
Management Company Daman Investments PSC 12.20 1
National Bank of Abu Dhabi PJSC 8.70 3 154.6
Al Rajhi Capital 17 5 662.49 6.82 2 36.6
43.1
Riyad Capital 13 17 156.65

HSBC Saudi Arabia Limited 10 12 165.88

1,990.62 Total AUM (in $mn) of Top 5 Fund Managers 86.2

(Includes Equity, Fixed Income, Money Market, Specialized) 374.1

109.9

2,663.03 KSA 7,033.88 156.6 UAE
3,312.47
53

3,838.03 339.5

NoSvouermce:bZaewry2a,0M1a5rm|owre wReswea.rwche(Daalttaha-smof o21nstitJuolyr.2c0o15m) Source: Zawya, Marmore Research (Data as of 21st July 2015)
*Includes only funds for which AUM data is available
*Includes only funds for which AUM data is available *Specialized funds data source: Emirates NBD Factsheet, 2014

DASHBOARD | Mutual Funds

A Coming Shift

The mutual fund industry in GCC region is set for significant growth
as local markets mature and open up to foreign investors

Mutual Fund Assets (% GDP) for GCC and Selected Countries

UK Saudi Kuwait With oil prices lower, and the industry
Arabia 3.0 growing in size and sophistication,
40.1 India Bahrain 3.8 wealth and asset management is
Qatar changing in the GCC — squeezing
6.6 3.8 Oman 0.1 margins in some areas and opening
Turkey UAE 0.2 up opportunities in others. As of July
2015, mutual funds accounted for
Korea 1.9 0.3 around $36 billion in assets, held
across 375 funds. Saudi Arabia
22.0 accounts for 80% of the total but,
even there, this is equivalent to less
Source: Bloomberg, IMF, Investment Company Institute, EY analysis. than 4% of GDP — just a tenth of the
share in the US. What’s more, less
than a third of these funds are
invested in GCC equities, representing
less than 1% of the capitalization of
GCC equity markets — compared
with more than a quarter of market
capitalization in the US.

Mutual Fund Assets in GCC, by class (%) Mutual Fund Assets in the GCC (US$b)

Saudi Arabia 28.8

4% Real estate Kuwait 5.1
6% Fixed income Bahrain 1.3
6% Mixed allocation
UAE 1.3
19% Commodity Qatar 0.3

54 32% Equity

33% Money market Oman 0.2

Source: Bloomberg, EY analysis. www.wealth-monitor.com | November 2015

Source: Bloomberg, EY analysis.

DASHBOARD | Mutual Funds

Estimated Pension Fund Assets (for mid-2015)

Bahrain 13 % share of equity market US$b 32
Kuwait 4
Oman 10 11 116 38
Qatar 6 65
Saudi Arabia 12 12 % of GDP 15
UAE 1 14
GCC 8 7
5 270
UK (employer) 25 24 6 36

397 The sector is highly concentrated in a
few funds. The top 10 (8 from Saudi
3309 Arabia and 2 from Kuwait) account for
42% of AUM; the 65 funds that are
Sources: Towers Watson, IMF, Bloomberg and national stock market, EY. larger than $100 million together hold
78% of assets. Across the region,
one-third of the market is focused on
equity funds and one-third on the
money market, but this hides
significant regional differences.

The Three Largest Mutual Fund Managers Per Country

Country Firm US$
Saudi Arabia
National Commercial Bank 8,162
Riyad Bank 4,810
Al-Rajhi Bank 3,797

Kuwait Kuwait Financial Centre 1,036 Given the very wide range of fund types
Kuwait Investment Company and geographic focuses and strategies,
National Investments Company 740 it is difficult to assess the performance
623 of the GCC asset management sector as
a whole against relevant benchmarks.
National Bank of Abu Dhabi 338 Across all countries and asset classes,
292 EY analysis shows the average total
UAE First Gulf Bank 253 return to be 11.5% over three years
(based on data for 246 funds). However,
Invest AD in Saudi Arabia, where the bulk of the
region’s domestically focused equity
Bahrain Blominvest Bank (Lebanon) 372 funds are based ($7.8 billion across 39
Global Investment House (Kuwait) 235 funds), EY estimates that the total
234 return averaged 18% over the last three
GIC Funds Company years, significantly outperforming the
Tadawul All Share Index, which
Al Rayan Investment 136 returned 13%. The relatively small size 55
60 of the mutual funds, and the
Qatar Qatar National Bank 48 inefficiencies in the market, provide
scope for active managers to
Commercial Bank of Qatar outperform the index. As the industry
grows, opportunities will expand for
Vision Investment Services 90 pure-play asset management firms.
59
Oman Bank Muscat 26

November 2015 | www.wOemalathn-mAroanbitBora.cnokm

Source: Bloomberg, EY analysis.

THE LAST LAUGH | Cartoon Strip

Now no business issue or financial topic is too hard to understand. Through this comic strip,
our in-house cartoon characters Thawr (Bull), Dub (Bear) and Hakeem (Wise Man) guide you
through the maze. This issue features the fundamentals of mutual fund investing.

56

www.wealth-monitor.com | November 2015