Al Rajhi Capital launches first MSCI multi-factor ‘passive’ fund

Al Rajhi Capital has launched its first multi-factor “passive” vehicle, Al Rajhi MSCI Saudi Multi Factor Index Fund, the investment bank said in a statement on Tuesday.

The new open-ended fund aims to achieve medium- to long-term capital growth by tracking performance of the MSCI’s Saudi Multi-Factor Index, which complies with Al Rajhi Capital’s Shariah board’s rules.

The Al Rajhi MSCI Saudi Multi Factor Index Fund is also the first passive fund in the market using the MSCI Saudi Multi Factor Index’s combination of three customized MSCI Factor indices, including Quality, Momentum, and Enhanced Value.

Each Component Index in the MSCI Saudi Multi Factor Index is attributed equal weight at each rebalancing date.

The vehicle was designed to have low-cost structure and provide investors easy access to the broader Saudi market.

It also uses a rule-based, disciplined and transparent investment process to outperform the market unlike active funds, which rely on traditional stock selection and management approach.

“This fund was created to meet growing investor needs for a low-cost and efficient way to access the Saudi equity market from a long-term perspective,” Megren Al-Kulaibi, head of Asset Management at Al Rajhi Capital, said.

“The fund targets both institutional and retail investors who are looking for a broader allocation to Saudi equity market from a strategic allocation or savings perspective,” he added.

Robert Ansari, Head of Middle East Coverage, at MSCI, added: “MSCI is pleased to have developed the MSCI Saudi Multi-Factor Index. Global interest from investors in multi-factor investing continues apace as they seek an alternative approach to the Saudi Arabian equity capital market and transparent routes to efficiently access this emerging market via various financial instruments.”