KUWAIT CITY, April 27: KIPCO Asset Management Company - KAMCO - holds a positive outlook for the growth of the KAMCO Energy Services Fund (KESF). It has had an outstanding performance in 2009 despite the difficult economic situation, returning 43.1% for the year, and is poised to do just as well in 2010.
The management team has been very aggressive in steering the fund through a challenging 2008 and take advantage of the market uptrend in 2009 and outperform the broad energy index, such as the MSCI World Energy Index and other regional Indices like the MSCI GCC Index, which returned 22.9% and 18.8% for the year, respectively.
The Fund has continued its positive trend in 2010, with a Year-To-Date (YTD) of +1.8% as of March.
“The Fund operated beautifully through the crisis taking into consideration that it is Shari’a-compliant with no hedging possibilities and the fact that many mutual funds and hedge funds went under in 2008/2009. KESF has been KAMCO’s best performing fund on a YTD return basis for 2009.  The stellar performance is a result of the amalgamation of KAMCO Direct Investment Department’s expertise and that of the renowned international advisor, Investec Asset Management.  In 2009, KAMCO introduced two new managers as part of the Fund’s Investment Committee - Mr Jonathon Waghorn and Mr Mark Lacey from Investec - who bring with them their expertise in the oil and gas industry and prior experience in this sector at Goldman Sachs,” says Mr. Khalil El Khoury, Senior Vice President & Head of the Direct Investment and Product Development Departments.  “We foresee a positive trend in 2010 which is an attractive entry point that implies a strong potential for new investors. KESF’s salient features such as monthly liquidity and strategy represent a good diversification option to local investors seeking exposure to international markets.” Mr El Khoury added.
Over the last two years, KAMCO’s Direct Investment team has managed to enhance its portfolio management capabilities and along with the expertise of the international advisor, succeeded in improving the Fund’s performance.  The Fund has returned +5.1% in March and is building enough momentum to generate double-digit returns for 2010.
The KAMCO Energy Services Fund, which is a Shari’a-compliant Fund, was launched in 2007 and aims to optimize value through a conservative yet opportunistic approach. The Fund is benchmarked against the MSCI All Country World Energy Equipment Index and the ML Renewable Index.
It is the first Shari’a-compliant hybrid energy fund in the Middle East and offers medium-to-long term appreciation from listed and unlisted equities pertaining to the oil and energy sectors in key regional and international markets. Following a dual energy investment model which focuses on both ancillary services for the traditional energy industry (oil, coal and gas) and alternative energy (wind, solar, bio-fuels and fuel cells), the Fund presents itself as a viable option for investors seeking returns from investment opportunities that are designed to promote environmental and energy sustainability.
“If one were to rank the Fund on the 2010 YTD performance basis, with other long-only international Energy Funds, it would be ranked in the Top 5, when compared against big names like BlackRock, Fidelity, and Guinness Atkinson which is a significant improvement from the 2009 YTD performance, for which the Fund would have been in the Top 10” Mr. El Khoury added.
Concerns
The MSCI World Energy Equipment and Services Index rose by 3.2% and the ML Renewable Energy Index rose by 8.1% for the month of March, while the broader MSCI World Energy Index was up 4.2%. The US Exploration and Production index was the laggard for the month (down 1.5%) as a result of weaker US gas prices and concerns that the US gas market will remain oversupplied for some time. Furthermore, the European Oil and Gas Index was the strongest on the month, and KAMCO sees this as a reflection of an increasing appetite for service companies exposed to tightening oil markets, and for exploration and production companies offering material exploration exposure.
KAMCO sees 2010 as a year of de-stocking. With OECD inventories around 10% above normal, OPEC’s output discipline (coupled with an improvement in global demand)  is essential for this de-stocking to occur in 2010. This should lead to a range-bound crude price for 2010. The cost dynamics of the industry suggest that the crude price should trade in a $60/bl - $85/bl range in 2010, with the oil price moving higher in the range as the fund manager sees the inventories decline.
Established in 1998 with the mission to significantly alter the local and regional investment landscape, KAMCO is a premier investment company based in Kuwait. A subsidiary of United Gulf Bank (UGB) - the investment banking subsidiary of Kuwait Projects (Holding) Company (KIPCO) - KAMCO was listed on the Kuwait Stock Exchange (KSE) in 2003.
 KAMCO’s Asset Management Division specializes in customized portfolio management, forward trading, access to IPOs, and local and international fund management. The Investment Advisory and Investment Research Division tracks the latest directions and trends across regional and local economies as well as equity markets and offers a range of customized services that focus on maximizing returns, mitigating risks, and maintaining capital appreciation for individual and institutional clients. The Company’s Financial Services and Investment Division offers a full range of advisory services on mergers and acquisitions, underwriting, private placements, debt issuance and restructuring, and private equity management.