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National Bank of Abu Dhabi Launches ‘Cautious Income Fund’

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On Wednesday, the National Bank of Abu Dhabi (NBAD) announced that, subject to approval by Emirates Securities and Commodities, it would launch the NADB Cautious Income Fund, a bond fund that would combine returns with low levels of risk for wary investors.

With investors concerned about real estate and equities markets, said NADB, this new fixed income fund “meets a vital and critical need in the market.” Open-ended and actively managed under the NBAD Growth Fund range, the fund “is open to institutional and personal investors who can invest as low as AED 5,000.” NADB expects annual returns of 5%, based on current market conditions, and says that income will be distributed semiannually.

The fund manager is NBAD’s Asset Management Group. Diversification will be sought through close attention to minimizing risk, and investments will include government and government-related entities, along with select corporations that fit the profile of the fund. Investments are selected from a range of bonds and money market instruments, predominantly in the UAE and wider MENA region, according to the bank.

Mark Watts, head of fixed income at NBAD’s Asset Management Group, said in a statement, “Many investors today are faced with low returns on cash deposits, which with rising prices translates into negative return on cash. The NBAD Cautious Income Fund diversifies portfolios and is targeted for investors who want to enjoy higher income while retaining the flexibility to access their investment on a weekly basis.”

Watts continued, “Across the GCC and the wider MENA region governments and corporations are investing heavily in expanding and improving infrastructure, which is mostly financed by bonds. As a result, this has created an unprecedented opportunity for investing in fixed income instruments that are based in the region. This is a great product for investors with a low tolerance for risk allowing them to capture higher returns without taking undue risk. Furthermore, it helps diversify any investment portfolio.”