Gulf Investment Fund (GIF) has released its annual results for the period ending 30 June 2023.
- Over the 12 month period GIF has generated substantial outperformance relative to its benchmark, the S&P GCC Composite Index. GIF generated a NAV total return of 20.4% and share price return of 18.8%, compared the the negative (1.3%) return from its benchmark. The outperformance can be attributed to a combination of sector and stock selection, as GIF increasingly reflects a Gulf region that is less reliant on the oil and gas industry.
- Over the last twelve months, GIF increased its exposure to financials, healthcare, consumer discretionary, industrial and material sectors on the back of attractive valuation and growth prospects. Conversely its exposure to the energy sector was reduced over the year, from 12.7% to 75%.
- The biggest development over the year has been the announcement that Jubin Jose, GIF’s portfolio manager, will step down at the end of December 2023. He will be replaced as portfolio manager by Bijoy Joy who is currently assistant portfolio manager. Bijoy has spent almost a decade working with Jubin on GIF.
- The board has made strides in growing the trust, as well as making it more attractive to UK investors. Over the period the board issued 450,000 shares, taking advantage of the premium the trust traded on. The board also implemented bi-annual tender offers, which saw c.250,000 shares purchased and cancelled in March/April 2023. The net result was an overall increase in share issuance over the financial year, with a further 375,000 share issued after the year end.
- The board has also introduced a sterling quote in order to maximise the ability for UK investors to invest in GIF. The sterling quote can be traded using the ticker GIFS. The board has also increased the amount of capital it has allocated to making the company more attractive to investors, which increased GIF’s OCF from 1.67% to 1.89% over the year.
GIF’s investment managers commented:
“The outlook for the GCC in 2023 remains positive, driven by benign inflation, giga & mega infrastructural projects, and continuous reforms across social and economic policies. The IMF projects GCC to grow by 2.9 per cent and 3.3 per cent in 2023 and 2024, respectively; after growing at 7.7 per cent in 2022 from a lower base. This compares to World GDP growing at 2.8 per cent in 2023 and 3.0 per cent in 2024.
“The IMF expects CPI inflation in the GCC to be 2.9 per cent and 2.3 per cent in 2023 and 2024 vs 4.7 per cent and 2.6 per cent for the advanced economies, respectively. The lower inflation in the GCC economies gives the necessary bandwidth to the GCC governments to continue and/or increase their fiscal spending at a time when the contribution from oil is expected to decline driven by production cuts by Opec+ and a slowdown in global economy.
“The pace of structural reforms in the GCC was maintained during the covid period of 2020-2022 due to which growth in the non-oil GDP is expected from fixed investments, private consumption, and high government spending ensuring diversification and unabating increase of the non-oil share in the economy.
“The global economy is under an overhang of an ongoing invasion of Ukraine by Russia, and an economic softness due to high-interest rates. Against such a backdrop, the GCC is a bright spot on the global map where the above-mentioned headwinds are positively offset by domestic public and private spending.”