GCC-focused Islamic funds have registered average returns of 16.8 per cent year-to-date (YTD), outperforming their conventional peers, which have managed just 14.2 per cent, Emirates Business research has revealed.

Out of the 40 GCC-focused funds analysed by this paper, 20 were Islamic funds while an equal number were conventional. The average YTD returns of all funds analysed stood at 15.5 per cent. However, offering evidence of the carnage that the region's financial markets have witnessed in the past 12 months, only four of the 40 funds analysed have positive returns over a one-year period.

Bahrain-domiciled Gulf Islamic Equity Fund, managed by Gulf Investment Corporation, topped the winners with 34.6 per cent YTD returns. The fixed-income Gulf Bond Fund, a conventional fund based in the same country and, interestingly, sharing the topper's manager, brought up the bottom of the rankings, with YTD returns of -0.96 per cent – the only fund to have managed negative YTD returns in our portfolio.

Not surprisingly, there were only two non-Islamic funds in the Top 10, which was dominated by funds from Saudi Arabia, with seven funds from the Kingdom making it to the Top 10. Two Bahrain-domiciled and one UAE-based fund made up the rest of the Top 10.

Between them, GCC-focused funds are worth more than $2 billion (Dh7.34bn). The SAR Money Market Fund, with a size of $537.3 million, is the largest fund in our listings while also Saudi Arabia-domiciled Al Yusr GCC Equity Fund is the smallest, with a size of just $500,000. The Top 10 have a combined size of $249 million while the Bottom 10 are about five times that size, at more than $1.2bn (one of the Bottom 10 does not disclose its fund size).

This suggests that when it comes to funds, economies of scale may not be that important and a smaller entity may be able to manage better.

The Top 10 Funds registered 27 per cent YTD returns on an average while the Bottom 10 Funds registered just 2.13 per cent YTD returns on an average. Out of the 40 funds Emirates Business tracked, 29 were equity-linked funds and four were sector-based. Index-linked, money market and trade finance funds accounted for two each with just one being fixed income fund.

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