How a Riyadh investment firm defied the pandemic

JEDDAH: The year 2020 has been challenging for many Saudi sectors. In late February, as the full implications of the coronavirus pandemic became evident, $6 trillion were wiped off global markets in six days.

But as we come to the end of the year, the picture is far from the apocalyptic scenes observed in the first quarter of 2020. 

Saudi Arabia’s benchmark Tadawul All Share Index (TASI) made a strong rebound and remained well above the 8,000-point level for most of the final quarter.

Globally, the S&P 500 Index in the US is up 15 percent this year, the Dow Jones Industrial Average made a 6 percent gain, and the technology-focused Nasdaq Composite Index defied the odds and surged 43 percent.

One of the local success stories has been Jadwa Investment, which also defied the odds and saw its investment advisory practice cross the SR30 billion ($8 billion) milestone in assets under advisement (AUA), a significant increase compared to last year’s SR13.4 billion. 

How did the company pull off such a feat? Ghanem Alghanem, managing director of the Investment Management Advisory at Jadwa Investment, told Arab News that there is “no shortage of asset managers in the Kingdom,” but what made the company stand out is its emphasis on independence. This may seem like a lightweight marketing ploy, but Alghanem offers proof.

“We don’t provide solutions that cater to the objectives of asset managers. We provide solutions that meet the needs of asset owners. As a policy, we don’t recommend or solicit Jadwa-managed solutions,” he said.

“Furthermore, our investment advisory team is only compensated by the fees received from our advisory clients. Jadwa doesn’t receive any rebates or referral fees from third-party managers for its advisory services.”

On top of that, he believes that its unique selling point is the lack of competitors with expertise in the Shariah-sensitive arena.

“There remains an under-served segment of large, Shariah-sensitive institutional clients who want to diversify and institutionalize their investment programs with the help of an unbiased advisor,” he said.

“Importantly, such an advisor would need to understand Shariah compliance and have a local presence in order to serve as an extension of the client’s own team.”

Another reason is Jadwa’s open platform, which allows it to represent a large number of clients and collectively negotiate favorable fees on their behalf.

“Following the launch of our investment advisory service, we’ve been able to grow our assets AUA further by introducing several multi-manager funds that provide access to top-tier global asset managers in a quick and cost-effective manner,” Alghanem said, adding that the firm has taken lessons from what occurred earlier in 2020.

“It’s hard to ignore the increased volatility and dislocations in markets today, which is expected to continue during 2021. Thus, we’ve started allocating our clients’ assets toward more defensive strategies,” he said.

The investments of Jadwa’s clients can be allocated both locally, internationally across developed and emerging markets, and across a wide range of asset classes, including public equity, Sukuk and real estate.

With 2021 just days away, the firm has been busy developing and launching new products and expanding both locally and internationally.

“Our international infrastructure fund and international leasing fund will respond to increased client appetite for diversification into asset classes with a lower correlation to public markets,” Alghanem said.

“Our international multi-strategy private equity fund will respond to the need for growth assets in a low-yield environment. All three funds should be launched during 2021.”

In addition, the firm is looking to deepen its relationship with government-linked institutions and charities, and is actively working on developing customized employee saving plans and savings programs for various organizations.