03 Jun 2021
CEO Hasan AlJabri Highlights the importance of sound asset allocation and the strengths of a Shariah-compliant and Prudent Ethical Investing approach in dealing with market volatility
SEDCO Holding CEO Hasan AlJabri participated in the Global Islamic Investment Forum. The virtual event was organized by Indonesia’s Hajj Financial Management Agency (BPKH) and the Islamic Development Bank (IDB) and beamed to a worldwide audience.
AlJabri joined leading global financial and investment experts in the panel discussion for the Global Investment session, following the keynote by Indonesian Vice President Ma’ruf Amin, as the forum charted a post-COVID economic recovery and investment trends in the future.
As a pioneering expert in prudent and ethical investing strategies, AlJabri noted that Shariah investors have had a smoother ride than their conventional counterparts during the pandemic. Not only have they avoided over-leveraged companies and insurance businesses, but have generally veered towards sustainable sectors that have emerged stronger in the pandemic — such as healthcare, consumer staples and technology.
During his talk, AlJabri stated that volatile environments need institutional investors to adhere to a clear set of principles that reflect industry best practice and clear investment goals. Strategies should be proactive and well-defined, as opposed to reactive and constantly chasing market swings.
“At SEDCO, we have created a clear Prudent Ethical Investing (PEI) approach that combines Shariah principles with best practices in ESG. This combination has generated attractive returns over both short and longer terms. Our research has shown that Shariah principles can outperform conventional investments given the right circumstances, while also maintaining lower risk profiles and adhering to our principles as an organization,” he said.
AlJabri emphasized the importance of long-term clarity in shaping a cohesive Strategic Asset Allocation approach, and choosing the right asset classes to meet investment objectives. A longer-term asset allocation approach should guide the investment process — and needs to be coupled with high-quality managers to deliver market-beating results.
“Our Shariah and PEI principles shape a Strategic Asset Allocation that evolves with time, but keeps our investments focused. At SEDCO, we rely on world-class market research capabilities and insight to adapt our allocations while exploring new asset classes that fit with our goals and values. For instance, we have recently added infrastructure as an asset class to our portfolio,” he added.
AlJabri also commented on how global markets are dealing with a COVID-driven market contraction. Whereas previous recessions have seen generous monetary policies come into play, expansionary fiscal policies are seeing overwhelming support this time around — with fiscal support programs being run by both developed and emerging markets. Monetary policy too remains accommodative, and is expected to continue in similar vein till 2023.
Finally, AlJabri cautioned against short-termism, where investors perpetually react to market cycles of fear or euphoria. He warned against extreme overconfidence, noting that going all-in on new asset classes or investments can backfire. He also noted that borrowing, while useful, is a double-edged sword that should be used sparingly.
In recent years, SEDCO Holding has honed its Focus 2025 strategy, focusing investments on sectors that are key to sustainable development and mentioned in the Saudi Vision 2030. Globally, the Group continues applying the principles of prudence and ethics that have given its investments the resilience to perform despite market downturns.