Al Rajhi Fund: Comprehensive Analysis of Performance and Investment in the

Al Rajhi Fund is an investment fund managed by Al Rajhi Capital, the investment arm of Al Rajhi Bank, and is classified as one of the leading collective investment tools in the Kingdom of Saudi Arabia. The fund aims to pool investors' capital and invest it in diverse financial assets, focusing on stocks listed in the Saudi financial market (Tadawul). Among the fund's distinctive features is its full commitment to Sharia standards, prohibiting investment in sectors or financial instruments that violate those standards.

The fund's management relies on a specialized team of analysts and investment managers who make decisions based on fundamental and technical analysis of targeted stocks and companies. The fund is often actively managed, meaning that its managers aim to achieve returns higher than the market average by swiftly buying and selling assets according to market changes.

Under the supervision of the Saudi Capital Market Authority, the fund is committed to periodic disclosure of its financial results and providing detailed reports to investors regarding portfolio performance and asset distribution. This regulatory structure ensures the highest standards of transparency and enhances investor confidence in the fund's performance and security.

With the expansion of the Saudi financial market, Al Rajhi Fund plays a pivotal role in attracting a wide range of investors, both individuals and institutions, seeking to benefit from the growth of the national economy within a disciplined and transparent investment environment.

The operation of Al Rajhi Fund is based on gathering capital from investors and directing it towards a diversified basket of financial assets, with a preference for stocks listed in the Saudi Tadawul market. The fund adheres to Sharia investment principles, avoiding investments in sectors or instruments that violate Islamic law, such as traditional banks or companies involved in alcohol or tobacco. Sharia compliance is assessed periodically to ensure full adherence.

When making investment decisions, the fund managers rely on a thorough analysis of the financial performance of companies, market trends, and available opportunities within promising sectors such as petrochemicals, Sharia-compliant banks, and basic industries like cement. The fund also seeks to distribute risks by diversifying its investments geographically and sectorally, considering allowable risk limits.

The fund's unit value is calculated periodically (daily or monthly) by determining the net asset value (NAV), allowing investors to accurately track their investment performance. An annual management fee is typically charged, ranging from 1% to 2% of net assets, reflecting the cost of active management.

It is noteworthy that Al Rajhi Fund does not trade in the market as it is an unlisted fund; its units are bought and sold directly through Al Rajhi Capital or authorized brokers, adhering to the fund's conditions and regulatory procedures.

Al Rajhi Fund experienced noticeable performance fluctuations during 2024 and 2025, reflecting the dynamic changes in the Saudi financial market. According to specialized media reports, the fund recorded a negative return of approximately -15.8% since the beginning of 2025, due to significant stock price volatility and external influences such as macroeconomic policies and changes in oil prices.

This aggressive performance is not an exception in a volatile market environment, as most active funds were affected by the same conditions. Conversely, the fund demonstrated relative capability in mitigating losses by rebalancing the portfolio and distributing investments among less affected sectors.

From a regulatory perspective, the fund is committed to providing quarterly and annual performance reports, detailing the evolution of net asset value, sectoral asset distribution, and portfolio performance compared to benchmark indices such as the main TASI index.

It is worth noting that the fund did not distribute cash dividends to investors during this period but reinvested returns within its assets, reflecting a focus on achieving long-term growth in unit value.

Overall, the historical performance of Al Rajhi Fund reflects prevailing market conditions while maintaining disciplined risk management standards to protect investors from potential sharp fluctuations.

Fees and costs are key elements that affect the net return achieved from investing in Al Rajhi Fund. An annual management fee is typically charged, ranging from 1% to 2% of net asset value, which is in line with the average fees in the Saudi market for actively managed funds.

In addition to management fees, other fees may be charged, such as subscription or redemption fees, according to the fund's policy as stated in the prospectus. These fees aim to cover portfolio management costs, research, financial analysis, and the repeated buying and selling of assets.

It is important for investors to understand that these fees are deducted from the unit value periodically, meaning that the performance reported by the fund is often net after deducting those costs. Investors should review the fund's official prospectus to understand all details related to fees and charges, as well as other conditions related to investment limits and redemptions.

The transparency of the fee structure is a strength for Al Rajhi Fund, as Al Rajhi Capital is committed to full disclosure of all management expenses and commissions, in addition to providing periodic reports that clarify the impact of costs on the overall performance of the investment unit.

Investment funds like Al Rajhi Fund follow clear policies regarding profit distribution. The fund often reinvests realized returns within its investments instead of distributing them in cash to investors, a practice known as profit reinvestment policy. This approach aims to achieve cumulative growth in the investment unit's value over the long term.

However, the policy may vary depending on the type of fund and the board's decisions. In the case of active equity funds, profits are typically not distributed periodically but added to the fund's value, allowing investors to benefit from the increase in unit value upon selling or redeeming it.

In real estate funds or those with periodic returns, a portion of profits may be distributed in cash according to the announced policy. As for the active Al Rajhi Fund, it has not issued any official announcements for cash profit distributions up to 2025, focusing instead on maximizing the overall fund value by utilizing returns for reinvestment.

Investors should review the fund's official prospectus and periodic reports to understand the applicable distribution policies, keeping in mind that profit distribution is not guaranteed and depends on the fund's actual performance and management decisions.

Investment funds in the Kingdom of Saudi Arabia, including Al Rajhi Fund, are subject to strict supervision and oversight by the Capital Market Authority (CMA). The authority requires the fund to adhere to periodic disclosure procedures, including publishing quarterly and annual performance reports that detail asset distribution, financial results, portfolio changes, and investment policies.

The fund also adheres to good governance standards, with an independent board overseeing the executive management's performance, in addition to having a Sharia committee that ensures full compliance with Islamic law principles in all investment operations.

The fund's reports are transparently presented to investors via Al Rajhi Capital's official website, and periodic newsletters are sent to clarify any significant changes in investment policy, fees, or performance. Investors can also request detailed reports or directly contact fund managers for additional clarifications.

These oversight mechanisms enhance investor confidence and enable them to effectively monitor their investments while ensuring protection from any undisciplined practices or exposure to undisclosed risks.

Compliance with Islamic law principles is one of the fundamental aspects that distinguish Al Rajhi Fund from many other investment funds in the Saudi market. The fund is committed to avoiding investments in sectors or financial instruments that do not comply with Sharia, such as traditional banks, alcohol companies, tobacco, or any activity involving usury or gambling.

A specialized Sharia committee oversees all investment decisions and conducts periodic reviews of the portfolio to ensure ongoing compliance. The list of permissible companies and instruments is updated based on market developments and Sharia reports issued by relevant authorities.

This approach meets the requirements of a wide range of investors who prioritize aligning their investments with religious values and enhances the fund's position among leading Islamic funds both within and outside the Kingdom. Additionally, Sharia compliance serves as an additional safety factor, limiting exposure to risks associated with highly volatile sectors or those that conflict with ethical and Sharia guidelines.

Al Rajhi Fund focuses its investments on a range of promising sectors that comply with Islamic law, giving relatively greater weight to sectors with a strong market base and sustainable growth. Among the main sectors that attract the fund's attention are petrochemicals, Islamic banks, and basic industries like cement, along with sectors such as telecommunications and healthcare.

Investment decisions are made based on a comprehensive assessment of growth factors, financial stability, and future opportunities in each sector. For example, the cement sector is considered a supporting sector for the national economy, especially with the implementation of major infrastructure projects under Vision 2030. Here, companies like Hail Cement (symbol: 3001) may be among the fund's investment targets if they meet the required Sharia and financial performance criteria.

Moreover, the fund seeks to diversify its investments across sectors to distribute risks, ensuring that the fund's performance is not solely tied to the performance of one sector, thereby reducing the impact of sectoral volatility on net returns.

The cement sector is one of the vital sectors to which Al Rajhi Fund may direct part of its investments, given its essential role in urban development and infrastructure projects. Among the companies listed in the Saudi market, Hail Cement (symbol: 3001) stands out as a medium-sized company within this sector.

Hail Cement is characterized by a growing production base and a geographical focus on the northern and central regions of the Kingdom. Fund managers monitor the performance of such companies in terms of industrial growth, financial liquidity, and distribution policies, in addition to their adherence to Sharia standards.

Al Rajhi Fund may invest in Hail Cement shares if attractive opportunities are identified based on financial and Sharia criteria, especially if the company demonstrates stable profits and attractive distribution yields. The company's periodic reports facilitate the fund's investment decision-making process.

It is important to note that the fund's investment in cement sector companies does not eliminate risks, as the sector remains affected by fluctuations in energy prices, raw material costs, and government policies related to infrastructure, necessitating constant review and updating of the investment strategy.

Al Rajhi Fund competes with a wide range of investment funds in the Saudi market, including funds managed by Al Ahli Capital, Alinma Investment, and Sama Capital. All these funds follow similar investment policies in diversifying portfolios and focusing on promising sectors, but there are significant differences in fees, distribution policies, and historical performance.

Al Rajhi Fund is distinguished by its strong brand, strict Sharia compliance, and depth of investment analysis used in asset management. Additionally, the transparency of reports and the availability of performance information on a regular basis allow investors to continuously evaluate their results.

In terms of performance, the annual results of the funds reflect variability depending on economic conditions and management policies, where one fund may outperform in a particular year due to its focus on a specific sector or its more conservative strategy. It is essential for investors to compare funds in terms of fees, net performance, and management team before making a purchase decision.

The competition in the Saudi investment fund market drives performance improvement and the development of investment products to meet the diverse aspirations of the investor base.

Investment funds, led by Al Rajhi Fund, play a vital role in supporting the objectives of Saudi Vision 2030, particularly regarding the development of non-oil sectors and expanding the national economy base. By directing capital towards companies involved in major infrastructure projects, the fund contributes to financing construction operations, developing local industries, and increasing employment rates.

This role gives the fund the opportunity to participate in the growth of sectors directly linked to projects such as NEOM, Qiddiya, and housing and renewable energy initiatives. It also helps stabilize the capital market by providing ongoing liquidity and supporting stock prices in essential sectors.

Furthermore, the fund's investments contribute to developing the business environment, encouraging companies to enhance transparency, and improving risk management in line with modern governance standards. This contribution supports achieving sustainable development goals and provides long-term investment opportunities for both local and international investors.

Although Al Rajhi Fund follows strict risk management policies, investing in it is not without risks associated with fluctuations in the financial market. The most prominent of these risks is the volatility of stock prices, especially during periods when markets experience downturns or external economic pressures such as changes in oil prices or global monetary policies.

There are also management-related risks, as decisions made by the investment team can directly impact final performance. Additionally, some targeted sectors may face their own specific risks, such as the cement sector, which is affected by energy costs or a slowdown in the construction sector.

Other risks include liquidity risks, where investors may face difficulties in quickly redeeming their units in certain exceptional circumstances, although this possibility is low in open-end funds with high liquidity.

For these reasons, investors should carefully review the fund's prospectus and understand the limits of risks before investing, considering their financial goals and ability to withstand market fluctuations.

Investing in Al Rajhi Fund requires opening an account with Al Rajhi Capital or an authorized broker in the Saudi market. After opening the account, investors can purchase fund units through electronic channels or by visiting the company's branches. The unit value is determined based on the net asset value (NAV), which is updated periodically.

A detailed prospectus is available that explains the fund's policies, fees, risks, and targeted sectors, and it is advisable to read it carefully before proceeding with the investment. Investors can also monitor the performance of their units and redeem them when needed according to the announced procedures, paying attention to settlement periods and applicable redemption policies.

Al Rajhi Capital is committed to applying the highest standards of investor protection, including transparent disclosure, internal oversight, and compliance of operations with Sharia provisions. It is always preferable to consult a licensed financial advisor before making any investment decision to ensure the fund aligns with personal and financial goals.