Investors continue to show interest in the country's Sharia-compliant National Bond scheme, despite the annual return rate dropping to 3.54 per cent last year on the back of falling asset values. The National Bonds Corporation said this week that it had crossed the Dh1 billion sales threshold in the first half of this year, 5 per cent higher than the previous year, and now boasted more than 590,000 bondholders.
The company said it had 145,000 female savers, who accounted for Dh1.1bn in funds, while the number of minors under the age of 16 had grown to a total of 94,000 and represented Dh350 million in funds. Overall, the company said that about 8.5 per cent of the UAE population were bondholders. "With such a significant segment of the UAE population already saving with National Bonds, it is testament to the success of our savings scheme that we still continue to achieve growth both in terms of number of savers and fund size," says Mohammed Qasim al Ali, the chief executive of the National Bonds Corporation.
Investors in the scheme can buy bonds at banks, money exchanges and Emirates Post. The company, which is owned by the Government of Dubai, Emaar Properties, Dubai Bank and Dubai Holding, uses the proceeds to make investments. It pays out a profit at the beginning of each year based on the performance of those holdings. It also holds a monthly draw with a top prize of Dh1 million (US$272,000), as well as a weekly draw that offers thousands of other financial giveaways. In the first half of this year, more than 83,000 bondholders won prizes totalling Dh26m.
"We are now looking to increase our focus on helping more people take control of their finances by promoting financial literacy, inculcating a savings habit, offering secure and rewarding savings plans and providing access for advice to financial protection products," says Mr al Ali. As part of this strategy, Mr al Ali said National Bonds last year launched an employee saving scheme, which gives workers the opportunity to save a portion of their salary each month through payroll deductions.
"Despite the overwhelming temptations for people to borrow, we are succeeding in our mission to encourage them to save regularly in order to secure their futures and that of their families." Bondholders earned an annual return in 2008 of 7.07 per cent. In 2007, bondholders received a profit of 6.03 per cent. National Bonds does not give guidance on its profit rates and it does not typically disclose its investments.
Each bond costs Dh10 and the minimum purchase is Dh100. The company does not charge a transaction fee and customers can open an account for free and cash in their bonds at any time. @Email:pf@thenational.ae
