To provide long-term capital appreciation and growth by investing in securities listed on the Saudi Stock Exchange, Tadawul and in securities offered in the course of an Initial Public Offering (IPO) in the Kingdom of Saudi Arabia.
The manager of the Morgan Stanley Saudi Equity Fund (Fund Manager) employs an active investment strategy by selecting securities which it believes will appreciate in value based on an analysis of sector and/or the expected return or growth of individual securities.
When selecting security investments for the Morgan Stanley Saudi Equity Fund, the Fund Manager adopts a long-term approach, focusing on the market price of a company’s securities relative to the Fund Manager’s evaluation of the company’s potential long-term earnings, asset value and cash flow potential.
The Riyadh-based team believes that fundamentals-driven, stock-specific investing when carried out within the context of broad Saudi macroeconomic themes can be successful in creating value for investors. Furthermore, the current mix between retail and institutional investors creates intrinsic price anomalies that can be a potential source of additional returns. The team believes it can best exploit these anomalies by applying a top-down sector allocation and bottom up stock selection approach.
Risk management is an integral part of the investment process, conducted at stock, sector and portfolio levels. At the stock level, the team focuses on developing a comprehensive understanding of company’s fundamentals to minimize exposure to high risk or speculative stocks. At a sector level, the team monitors sector and industry allocations, with benchmark deviations confined to a defined range. At a portfolio level, tracking error is monitored.