Twenty-four - or nearly half of the new funds - are Sharia-compliant - a trend that started last year when a majority of the new funds launched adhered to Islamic principles.

Al Mal Capital is looking to add at least two more to that tally. "We are going to launch three funds - two this year and the third by the first quarter," says Tareq Qaqish, fund manager at the Dubai-based investment house.

Interestingly, Al Mal's funds will not be exposed purely to equities, but offer a mixture of asset classes, as risk-averse investors choose to hedge their bets.

"Some of investors who were hit hard by the concentration of funds and we will be offering them a mixture of Sharia-compliant, capital guarantee, fixed-income and equities, to help them reduce volatility."

A mixed bag

Indeed, some funds launched this year include not just the plain-vanilla equity or index funds, but two hedge funds, plenty of fixed income, money market and sukuk funds.

Twenty funds launched this year were focused on the MENA region, another six purely on the Gulf, 12 on Saudi Arabia and five on Egypt, suggesting that asset managers continue to cast their nets wide to capture the best performing companies across the region or in larger markets.

But what's the outlook for the last three months, especially as some of the major MENA markets firmly in the red, with Saudi, Egypt and Dubai 40 per cent down this year?

Of the 300 funds tracked by Zawya, only five have posted a decent double-digit gain year-to-date, suggesting the global financial crisis has spared very few. Still, there are some pockets of growth.

Levant funds seemed to have fared better with five funds in Zawya's top 10 gainers to date, led by Lebanese funds which have risen on the back of the 30 per cent rise by the Beirut Stock Exchange this year.

Major markets

But the major regional markets may well have the last laugh. "The last time Saudi equities were so inexpensive was almost a decade ago in the first quarter of 1999," says NCB Capital head of equity research Bryan D'Aguiar, in a report on the Saudi market.

"Markets should rebound in the medium term. We forecast a 23.4 per cent annual rise in Saudi markets over the next five years, based on a justified P/E of 14.7x," says D'Aguiar.

Global Investment House, which manages around 35 funds, is also putting on a brave face in what are clearly tough times for fund managers.

Omar Al Quqa, executive vice-president, says: "Given that we live in a globalised financial market, the mood in the regional equity markets has also been affected by the fear that has gripped the world's markets. However, the current turbulent market conditions offer an attractive entry point to long-term investors in the Kuwait Stock Exchange. The recent decline in the domestic market has brought valuations to levels not witnessed in a long time."