Saturday, Apr 4, 2020
International Finance
Asset Management Magazine

Alinma’s new fund to distribute periodic income

Alinma Investment Company
Such an investment vehicle will be of interest to asset managers and investors managing or interested in savings programmes that also promote a savings culture in Saudi Arabia

Alinma Investment Company (AIC) is a Saudi Arabian closed joint stock company wholly owned by Alinma Bank. AIC was established by Alinma Bank with a capital of SAR1 billion (about $266.7 million) and a paid-up capital of SAR250 million (about $66.7 million). The purpose of the fund is to be at the forefront of leading companies that provide a full range of Shariah-compliant investment products and services leveraging the best and latest financial services technologies. Alinma Investment Company obtained the CMA (Capital Market Authority in Saudi Arabia) licence No.09134-37 on April 14, 2009 and launched its operations on January 17, 2010. Alinma Investment Company is currently engaged in a number of activities, including dealing as a principal and agent, underwriter, investment funds manager, portfolio manager, and provider of advisory and custodial services for securities business.

International Finance: What are the features of Alinma Saudi Government Sukuk ETF Fund – Short Maturity?

Alinma Investment: Alinma Saudi Government Sukuk ETF Fund – Short Maturity was approved by the CMA on the first day of 2020 as an exchange-traded fund that aims to mimic the performance of a certain index. The fund invests passively into a basket of local government sukuks issued by the Saudi Arabian government with certain characteristics such as, that are listed on the main market and that are set to mature in five or less years from inclusion into the funds index. The term sukuk refers to an Islamic financial certificate like a bond but that complies with Islamic regulations commonly known as Shariah regulations.

What are the Alinma Saudi Government Sukuk ETF Fund – Short Maturity’s objectives?

There are several objectives for the fund including periodic distribution of income. They also include enabling retail investors to invest in such type of an asset, reduction of cost compared to direct investment, as well as enhancing liquidity. In addition, such an investment vehicle will be of interest to asset managers and investors managing or interested in savings programmes that also promote a savings culture in Saudi Arabia, which is one of the key objectives of the Saudi Vision 2030.

Who are the service providers to the Alinma Saudi Government Sukuk ETF Fund- Short Maturity ?

Alinma Investment Company (AIC) strives to provide the best service quality to its clients. As such, the Alinma Saudi Government Sukuk ETF Fund – Short Maturity is managed by well-known international brands and experienced names such Credit Swiss, IHS Markit, and Apex among others.

What is the Alinma Saudi Government Sukuk ETF Fund’- Short Maturity’s size?

The Alinma Saudi Government Sukuk ETF Fund – Short Maturity is the largest ETF investing in sukuks in the world with assets under management of more than $333 million.

What is the expected return and distribution on an investment into the fund?

Based on current market prices, AIC expects a net return of about 2.5 percent on investing into the fund aside from changes in market price. Alinma Investment Company intends to make cash distributions to unit holders using proceeds from coupons received from the Alinma Saudi Government Sukuk ETF Fund- Short Maturity’s assets once a year, no later than the end of the fund’s financial year

Who are eligible to subscribe to the Alinma Saudi Government Sukuk ETF Fund-Short Maturity?

Eligible natural or legal persons and government bodies can invest in Alinma Saudi Government Sukuk ETF Fund-Short Maturity after considering the fund’s investment objectives and the risks associated with such an investment.

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