$1.7 billion subscribed
in investment funds

Fixed-income securities are favored

Total subscriptions in local and foreign investment funds reached $1.7 billion in 2017, a drop of three percent compared with the previous year, according to the annual report of the Capital Markets Authority (CMA) for 2017.

The number of local and foreign funds with local subscriptions increased last year by 7.6 percent to 527.

Subscriptions in local funds fell 6.6 percent to $791 million while the funds’ total number increased by 15 percent to 23.

Subscriptions in local funds, which solely invest in fixed-income instruments, more than tripled to $50.9 million, according to the CMA report.

Faysal Barbir, Director-Capital Markets at FFA Private Bank, said that local investors are becoming more aware of investment alternatives to regular deposits, particularly because fixed-income funds have generated attractive returns in recent years. He said that these investors usually prefer and are more familiar with fixed-income options because they are, most often, risk-averse.

Most of the 18 local funds invest in the Middle East, four in global markets, and one in the United States.

Subscriptions in foreign funds remained basically unchanged at around $900 million. The number of funds increased by seven percent to 504.

Subscriptions in foreign hedge funds increased by 31 percent to $82.6 million in 2017, compared with the previous year.

Subscriptions in foreign funds investing in shares increased 7.8 percent while subscriptions in foreign funds investing in fixed-income instruments grew by 4.5 percent.

Barbir said that share prices performed well in 2017 at the global level, especially in the United States. He said that local investors who prefer shares are usually more sophisticated, and they select their own investment portfolio.

Nearly 66 percent of the foreign funds invest in securities denominated in the U.S. dollar. The funds that invest in euro-denominated instruments account for more than 26 percent of the total number of foreign funds.