Abu Dhabi: The National Bank of Abu Dhabi (NBAD) said Wednesday it plans to launch a low-risk bond fund with a target to raise up to Dh200 million within the first couple of months of its launch.
NBAD Cautious Income Fund's launch is subject to approval by the capital markets regulator Emirates Securities and Commodities Authority (SCA).
"The launch price of NBAD Cautious Income Fund would be Dh5 per unit. Price of units will change as market conditions evolve," Mark Watts, Head of Fixed Income, Asset Management Group at NBAD said at a news conference here. The fund is open ended and is open to institutional and personal investors who can invest as little as Dh5,000.
Watts said the expected annual return on the NBAD Cautious Income Fund is 5 per cent based on current market conditions, adding that any income will be distributed semi-annually.
The fund would invest in a range of bonds and money market instruments predominantly in the UAE and wider Middle East and North Africa region.
The fund manager, the bank's Asset Management Group, will diversify the fund by paying close attention to risk minimisation. It would include government and government-related entities as well as select corporations that fit the fund's profile. "We are going to be investing in high quality sovereigns and companies," said Watts, citing bonds of the Abu Dhabi government, Tourism Development and Investment Company, Mubadala Development Company, Qatar government bonds and Aldar Properties among possible investment options.
Watts clarified that the fund wouldn't be investing in any bond that has a credit rating below B-. As well, he said the average credit rating of the bonds would be investment grade.
NBAD's Asset Management Group is one of the largest asset managers in the region with Dh4.1 billion under management.