Egyptian born and raised, educated in the US, and with a career that includes a decade working in London for global asset managers, the Dubai-based head of asset management at EFG Hermes, Amr Seif, certainly has plenty of international experience.
Seif explains that the asset management offices of EFG Hermes started life as an Egypt-only investment bank in the ’90s, but now covers Egypt, Dubai and Saudi Arabia. It has a range of equity, fixed income and money market funds, and its assets have risen to around $2.5bn (£1.7bn, €2.2bn).
“Now we are trying to grow beyond our comfort zone, which is the Middle East and North Africa, so we can use our skill and operational leverage in markets that share the same characteristics as ours, and handle frontiers,” Seif says.
As well as being head of asset management, he co-manages, with Junaid Farooq Sherif El Haddad, the firm’s recently launched Frontier Markets Fund, which is a Dublin-domiciled Ucits.
“Right now, there is a level of uncertainty about Egypt’s future in terms of investment laws and direction."
One of the drivers behind EFG Hermes’ expansion plans stemmed from a desire to have a European umbrella to accommodate the European investors who were interested in its track record and funds.
“That process took over a year. We domiciled in Ireland and launched in January of this year. We expanded our range from the Middle East and North Africa markets to frontier markets.”
The other Ucits fund, the Mena Equity Fund, is a clone of an existing portfolio called the Middle East & Developing Africa Fund, run by Sherif El Haddad.
This fund, says Seif, is a stock-picking equities fund that aims to give the best 25 to 35 stocks in the Middle East and North Africa at any given time.
In terms of country exposure, Saudi Arabia represents the single largest percentage, with the UAE also quite large.
Finding value
But what are the prospects, given that Saudi Arabia is having to tighten its belt?
“The entire region is, for one reason or another,” Seif confirms. “Egypt will have to tighten its belt because of the shortage of foreign direct investments. Saudi Arabia will have to do the same because the oil revenue proceeds have gone down massively.
“What we try to do, and what we tell our clients, is that, yes, the macro picture is extremely important. However, because of where we sit, how long we’ve done this and our track record, we can promise we can always find where the value is. Even though it could be under a very disadvantageous macro environment.”
The sectors he likes are the ones that benefit from a rising middle class, and a rising income.
“Saudi Arabia is a very affluent country, but the population as a whole is not as affluent. New consumption habits and new regulations in healthcare and education for example, means some equities benefit from this environment.”
The company’s time horizon for investment is in excess of one year, and there are some stocks that have been held for longer than five years.
“Our style is long-term. However, we always have to be alert to anything that could threaten the investment case we use to build the entry point to any single stock. If there is some event that is affecting the conviction of the fund manager, then we change it. If there are just market reactions, or unfounded weakness in any stock, we could go ahead and buy more.”
Turning to the UAE, Seif says the economy is less tilted towards oil, and more geared to tourists and expat living.
