MENA Mutual Funds
According to the World Bank definition, the popularly termed MENA region
includes twenty-one countries in the Middle East and North Africa. In
2008, MENA mutual funds were quite popular among investors. They seemed
to offer many positive features for investors, offering attractive
valuations, healthy returns, and the allure of a new and exciting
investment opportunity. In fact, London data company EPFR Global had
even reported that African regional equity funds brought in $247 Million
of investments in the first half of 2008, and MENA funds drew in an
additional $1.3 billion.
Several years ago, MENA mutual funds were being launched not so much by
domestic asset managers in the MENA region, but by some of the big
international asset management firms, most of them managing the funds
from outside the MENA region. For example, in 2007, T. Rowe Price
launched a new fund focusing on the emerging markets of Africa and the
Middle East, investing primarily in stocks of companies located or with
primary operations in the region. This highlighted the rising interest
across the globe in the equity markets of the MENA region. MENA had
become a new buzzword, similar to BRIC (Brazil, Russia, India, and
China), several years earlier.
The year 2009, however, witnessed a mixed trend in the MENA focused fund
market, with an encouraging first half offset by a bleak second half,
with dwindling numbers of funds in the region. The capital markets in
the MENA region are part of the emerging markets world. Therefore,
investing in MENA mutual funds clearly carries a level or risk that
investors need to take into consideration. Given the rapid economic and
capital market developments in the MENA region, however, MENA mutual
funds could provide a good investment opportunity as well as portfolio
diversification for medium and long term investors.
In order to generate long term global interest, the MENA region needs to
demonstrate that its capital markets are on par with at least other key
emerging markets. In addition, the region has to differentiate itself in
terms of the opportunities it provides global investors that will help
them consider the MENA markets, and thus MENA mutual funds, as a bigger
part of their overall asset allocation.
