The National Fund Management Company (Al-Ahly) proposed to the National Bank of Egypt (NBE) that a stock fund which adopts a precautionary strategy be established, according to head of Al-Ahly Company Essam Khalifa. Al Ahly is the investment arm of NBE in the field of managing investment funds.
The precautionary strategy mainly depends on investing in stocks of less than 50% of the fund’s capital, and utilising the other 50% in debt instruments, like treasury bonds and bills, Khalifa said.
He added that these funds are in high demand from a large number of investors, owing to a strong desire to reduce risk levels while ensuring that beyond-average revenues will be achieved compared to the revenues of investing in deposits and debt instruments.
“The fund’s capital has not been decided yet. The issue will be raised for discussion during the meetings planned to be held with NBE in the upcoming days,” Khalifa said.
Al-Ahly is managing assets with an estimated value of EGP 11-12bn. They are distributed over a group of stock funds and cash markets that abide by Sharia law, said Khalifa.
Khalifa revealed that his company has made connections with EgyptAir and the Arab Contractors Company, the goal of which is to build a financial portfolio in order to manage the assets of the company’s insurance fund.
The volume of each company’s fund is nearly EGP 1bn, which means that Al-Ahly can obtain a contract to manage each fund’s assets either on its own or by distributing the fund’s assets over more than one fund and portfolio manager, he added.
Private insurance funds are ones established by any association, union, body, or individuals connected through the same profession, or any other social relevance, with the aim of offering compensation, financial privileges, regular salaries, or pensions for members of the fund.
There are six types of private insurance funds in Egypt: fellowship funds, investment and saving funds, funds for bonuses of individual employment contracts, treatment funds, supplementary funds, and funds of special nature.
In September 2015, the Egyptian Financial Supervisory Authority (EFSA) issued regulations that oblige private investment funds to appoint a full-time investment manager or a company to form and manage portfolios when the fund’s value exceeds EGP 100m.