An emerging markets strategy with some twists, from the Gulf

Gulf International Bank, which is owned by the six governments of the Gulf Co-operation Council, has launched an innovative emerging markets fund which uses various hedge fund strategies to provide investors with absolute returns.Seeded with $100 million of internal and client money, the fund, which is managed from London, is investing across emerging markets, taking long and short positions, primarily in fixed-interest credit securities but also equities and currencies. It is denominated in US$.

Anthony Chisnall (pictured), head of investor relations for Gulf International Bank, UK, said: “Although traditional strategies provide broad exposure to emerging markets they do not have  the same protection in a falling market. The lesson from 2008 was that, ultimately, all risk markets are correlated so the only protection is through being short expensive credits or equities in a down market.”

The investment team of six is headed by Uday Patnaik. There is no geographical bias, Chisnall said, although the firm’s Middle Eastern experience differentiates it from other emerging markets funds.

The majority shareholder in Gulf International Bank is the Public Investment Fund of Saudi Arabia. The other “Co-operation” states, which are minority shareholders in the bank, are: Bahrain, Kuwait, Oman, Qatar and United Arab Emirates. The firm has about $15 billion in client assets under management.