‘Risk necessarily doesn’t mean loss of capital’

Interview with Loay Ragheb, Chief Commercial Officer, Takaud.

Tahir Haneef

tahir@dt.bh/DTNN

Takaud recently launched its wealth management division and created an open architect platform that can adopt any fund around the world, says CCO Loay Ragheb. The company will not charge heavy fees from its clients and will strive towards creating long-term wealth, he added.

An author by himself, Ragheb is a rare soul among the global investment professionals with a deep interest in spirituality and his book is a testimony of this rare combination.  Excerpts from the interview...

Takaud has invested heavily in infrastructure?

Yes, we have invested heavily in infrastructure to support our channels of distribution. This open architecture gives us the ability to build a very strong back office. Net asset value can be calculated very fast, online access for clients, client reports, consolidation of assets, mobile access for client accounts, switching of funds all are made possible because of the architecture we created.

Takaud deal with banks for creating Bancassurance, we deal with insurance companies to create unit linked policies, we have a corporate channel that provides tailor made savings plans and pensions, we have appointed financial consultants who offer savings plans and investment plans, and we also have wealth management which gives private banking experience at a fraction of the entry requirements of the existing norms.

At Takaud, you can get wealth management services for as little as $1,00,000 against the industry standard of a million dollars and its multiples.

Flat fee or fee as percentage of asset managed?

The fee structure is complex, but the beauty of it is that it is negotiable. We determine fee on a case by case basis , considering the depth of work involved with each client, the selection process that is required, and many criteria. But we make sure we undercut most of our competitors, especially from the insurance industry and the banking industry. And, our financial consultants offer plans for clients who want to invest below $100,000.

Even if the clients have only 25 BD available to save on a monthly basis, he or she will have access to the top funds selected through strategies that are managed and approved by the investment committee at Takaud and external think-tanks.

How is the response to these offers?

Response is very high.

In financial consultancy channel, the numbers are very high. We are deeply involved in educating public about savings habits, through social media and other channels.

Wealth management service has been recently launched; we are surprised at the keen interest shown by the prospects and clients to examine our strategies.

Referring to Takaud strategy, do you follow quantitative or qualitative methods for portfolio construction?

We include both. We have an investment committee that is composed of intellectual heads at Takaud and includes representatives from across the globe. Their recommendations after being approved by the board are implemented.

We have created conservative strategies, balanced strategies, and aggressive strategies, where a mix of funds can be used to create the required balance and that can also bring in a mix of global funds, regional funds and Sharia compliant funds.

So, each of them are separate pool of funds?

Yes, these are different strategies and each strategy will have around eight to thirteen funds in them and is offered to the client as a single fund. Hence, it is highly diversified, highly structured, constantly rebalanced to reflect the risk appetite and expected returns, and takes into account various considerations like age, income, future requirements and other such aspects.

We manage not by returns but by objectives. Let’s say a person is 31 years old and wants to create a continuous income after his retirement, we will assist him to achieve that objective.

What is your definition of aggressive portfolio in terms of expected return and risk?

An aggressive portfolio will consist largely of shares in listed companies.  It may mean investment in equities in China, India or Europe or in the shares of companies in this region.

Risk necessarily doesn’t mean loss of capital, we are talking about fluctuations. When in an airplane, we don’t jump from the plane for every bumpy-ride through air pockets.

Aggressive portfolio aims for ten percent plus annual return, and there are many classes of aggressive portfolios. You can create an aggressive portfolio with blue chip companies as well as small cap companies with a market cap below $500 million.

Takaud strategies are oriented towards long-term or short-term?

There are short-term, midterm and long term. When it comes to investments, we tend to shy away from less-than-three years because anything below that time-frame is difficult to forecast.

Do you use derivatives in portfolio construction?

Derivatives may be part of many funds as part of their strategy. But, we do not use derivatives as it is an instrument that has high risk factor associated with it.

Are hedge-funds present in your fund offerings?

We are looking at them, but haven’t included them yet.

However, if a client comes to us and demand for including a specific hedge fund in his or her portfolio, and if we are given a mandate for the same, Takaud can include the specific fund for that particular portfolio.

What is your view about Bahrain financial sector regulators?

Bahrain policies regarding the financial services sector are very progressive and that is the reason we choose the Kingdom as they understand our model and the challenges we face. And, we are extremely happy to work with them.

Because they facilitate, they are thorough and know what they are doing, and have the intellect and capability to drive the required change in the financial sector.

So, they are doing their job well?

 Yes, they are.  They might be stringent at times and naturally we may react to that. But, we have grown to appreciate that very much, as it makes us careful. We appreciate that, as it helps protect investors, the public and us.

Bahrain economy: what are your thoughts about its future prospects?

Bahrain has begun to show signs of recovery from the 2008 issues and problems after that. You can see companies starting to come back, there is movement in Construction projects.

The people are more focused now, in producing and working, and if the stability enjoyed by the Kingdom is sustained, it will have very good prospects.

At Takaud, we are growing as an organisation and aims to reach 100 employees soon and we are now at 25 to 30, many of them are Bahraini nationals who are coming back to the Kingdom.

What we learnt from the 2008 recession?

 We have to remember that the last recession was not similar to the great depression of 1929 in US. At that time, people were standing in line to get a loaf of bread.

In 2008, the coach was destroyed, but not the road. There is no doubt about the reason that caused the recession; that is the unbridled multilayered leveraging on real estate and loans raised on them.

Greed drives the economy, but after a point it turns harmful, like in 2008.

Which is your  favourite book?

‘Boom, Bust and Echo’ written by David Foot as well as ‘Power of Now’ by Eckhart Tolle

I am a writer myself and has written a book “The higher you” which is available on Amazon.