Al Rajhi Capital, the investment banking subsidiary of Saudi Arabia's Al Rajhi Bank, announced on Saturday the launch of the Al Rajhi Capital Protected Funds. As the newest additions to Al Rajhi Capital's innovative and diversified product offering, the Capital Protected Funds are a Shariah-compliant suite of three-year closed-end mutual funds offering quarterly redemption (not exceeding 10 percent of the fund's net asset value (NAV). There are three funds in the Capital Protected Funds family providing varying levels of capital protection from 90 to 95 percent and exposure to local, regional and international markets so as to offer investors greater choice in their overall asset allocation. The funds include the: - Al Rajhi Local Shares Capital Protected Fund, offering 90 percent capital protection; - Al Rajhi GCC Shares Capital Protected Fund, offering 90 percent capital protection; and - Al Rajhi International Shares Capital Protected Fund, offering 95 percent capital protection. The objective of the Capital Protected Funds is to present investors with dual benefits. The Funds will provide capital protection whilst seeking returns from capital growth through investments in Shariah-compliant equities invested in the Saudi, GCC or international markets. Commenting on the launch of the Funds, Marcus Andrade, CEO of Al Rajhi Capital, said: “Today more than ever, security is top of mind for investors and we are delighted to introduce a product that considerably eliminates the risk of capital loss. Our Capital Protected Funds are ideal for more cautious investors, allowing them to benefit from the potential upside of more risky asset classes such as equities whilst knowing their capital will be protected all the same.” To achieve these aims, the funds' strategy will be to invest a significant portion of assets through deferred sales of commodities thus ensuring capital is protected. At the same time, to generate capital gains, the remaining assets are invested, through an Arbun mechanism, in a “Dynamic Portfolio,” which is actively managed so as to effectively control the volatility within a given limit while capturing profits from positive trends. Investments in the “Dynamic Portfolio” will be comprised of both equity instruments and lower risk solutions offered by Al Rajhi Capital such as its Commodities Fund. Gaurav Shah, head of Asset Management at Al Rajhi Capital, added: “Investors seeking security and with a time horizon of three years are our target audience. There is considerable institutional and retail client demand for solutions that gravitate towards capital protection. Hence, it is timely for Al Rajhi Capital to launch these products now to respond to market needs, as well as to provide more choice to investors. These funds are unique in that they offer investors access to a proven equity investment franchise along with reduced risk of capital loss.” “We expect strong investor demand and are confident that the Capital Protected Funds are the right product for many of our clients and investors who are today looking for the optimal risk and reward proposition, which this suite of Funds offers,” he added. The funds are open to individuals, corporates and institutions, both local and foreign. They have a minimum subscription of SR10,000 and have been opened open for investment last April 17 for a period of 44 days that will end end on May 23, 2010. Al Rajhi Capital Protected Funds are available at Al Rajhi Capital Investment & Fund Centers across KSA.
