ADCB assures fund investors despite posting loss this year

The Abu Dhabi Commercial Bank (ADCB), one of the largest banks in the Middle East, sought yesterday to reassure fund investors about their money despite losses this year because of the global financial crisis.

ADCB Fund Management Head, Mark Friedenthal, said the bank aims for high return from fund investment in the long run rather than the short term, adding that the crisis would not prompt any change in such a strategy.

Quoted by the ADCB's monthly bulletin, Excellency, he said the Bank would continue to focus on the UAE and other Middle East markets on the grounds they are more secure and profitable than global markets in the current conditions.

"Our model portfolios are built on a long term basis so we see no reason to change our portfolio composition in light of current conditions. Yes, global markets have corrected recently, but all of our modelling has been done over a 13 year view. Statistically that is an extremely long period of time and so we are still completely comfortable with this," he said.

"Short-term volatility in financial markets is unavoidable so it would be wrong to focus too much on the short term. A portfolio might go up 50 per cent one year and down 20 per cent the next so we make it very clear to investors that they should be looking at rolling periods of three or more years rather than looking at the performance over discrete 12-month periods, because that is far too short a time horizon for a meaningful performance expectation."

Friedenthal said investors had been often told that although the fund aims for certain returns year-on-year, it is impossible for anyone to guarantee it.

"Our expectations for the longer-term tend to be more accurate… inevitably there are some worried investors but we have always made it clear that we are investing for the long term. Funds have made losses this year around the world. We classify the UAE as an emerging market and the performance here has been no worse than the performance of funds in other emerging markets."

Asked whether the global crisis would prompt changes in ADCB's fund strategies, he said the UAE and other countries of the Middle East and North Africa would still be regarded as among the best destinations.

"I don't think the situation will change that view. I'm not just saying this because of our regional bias. If we consider developed markets such as the United States and Europe we see these economies having a difficult time, unemployment is increasing, the manufacturing and services sectors are contracting and expectations are for the worst recession since 1982," he said.