MUSCAT, 16 September 2012 – The first-of-its-kind money market fund launched by bank muscat Asset Management has evoked a strong response, exceeding the initial asset under management (AUM) target. The unique investment vehicle offers an alternative for corporates and financial institutions to park their short-term cash surplus with low risk, daily liquidity and ease of operation.
The open-ended fund currently invests mainly in call accounts, fixed deposits, certificate of deposits issued by strong banks in Oman and other GCC countries. The current yield on the fund is around 1.1% p.a net of all fees which is significantly higher than the call deposit rates in Oman.
Ali Said Ali, DGM — Asset Management and Private Banking, said: “bank muscat is proud to successfully launch the Money Market Fund which serves as a safe cash management tool with higher return. The bank’s strong investment process strengthens the fund and makes available to investors in Oman a new type of instrument previously available in international markets only. We are thankful to the corporates and financial institutions who have endorsed the fund.”
The fund’s short-term nature of investments significantly reduces the element of risk. The fund also offers high liquidity and yields linked to short-term interest rates. If short-term interest rates in the general economy go up, so do yields on the fund.
The minimum investment in the open-ended fund is RO 250,000. Significant investment by the fund would be in deposits/instruments with less than 3 months maturity. The fund will not invest in instruments having maturity of more than 1 year.
The entities or instruments in which the fund invests should be rated investment grade by credit rating agencies such as Standard & Poor’s, Moody’s, Fitch or Capital Intelligence. The fund will invest only in instruments/securities that are denominated in any GCC currencies or US dollar.
Investment in deposits outside Oman will not exceed 50 per cent of the fund size and not more than 15 per cent of the fund’s Net Asset Value will be in deposits of any single entity outside Oman.
bank muscat Asset Management Department (AMD) has always taken the lead to understand the needs of retail and institutional clients and provide suitable investment solutions. The department currently manages assets of around $950 million investing in fixed income and equities. bank muscat AMD offers a variety of funds investing in Oman, GCC countries and India. It is one of the largest fund managers in the region and enjoys a dominant position being the first fund house in Oman with funds graded by Standard and Poor’s Capital IQ.
bank muscat AMD also manages structured products, hedge funds and private equity funds. The division offers discretionary portfolio management service to suit varied clients, including pension funds, global funds, high net worth individuals, corporations and other entities. bank muscat AMD is currently evaluating opportunities in fixed income and real estate in the GCC region.
Money market funds globally account for $4.7 trillion which is 18 per cent of the global assets under management of $25.84 trillion. In the GCC region, there are 56 money market funds with $14.56 billion assets under management, accounting for 52 per cent of the total funds in the region.