RIYADH: Disclosures from the 10 largest funds investing in Saudi equities reveal that asset managers entered the second quarter of 2026 with portfolios concentrated in a limited number of companies, led by Al Rajhi Bank and Bahri, while their exposure to Saudi Aramco was comparatively narrower despite the company’s weight in the market.
The combined net assets of the funds and share classes covered totaled around SR16.74 billion ($4.45 billion), according to ownership data as of April 1, the start of the second quarter.
Asset concentration driven by 2 stocks
Al Rajhi Bank topped the investments of the 10 largest funds, with a value of nearly SR2.4 billion, equivalent to 14.3 percent of total fund assets. The stock appeared among the largest holdings in nine of the 10 funds.
Bahri ranked second, with exposure estimated at about SR950 million, spread across eight funds and seven independent strategies. Together, Al Rajhi Bank and Bahri account for around 20 percent of the sample’s total assets, meaning one out of every five riyals is managed by the funds studied.
Stc came third with about SR744 million, followed by Saudi Aramco at SR719 million, Bank Albilad at SR544 million, and Tawuniya at SR532 million. Aldrees Petroleum and Transport Services Co., gas-sector holdings, Ma’aden, and SABIC Agri-Nutrients rounded out the list of the 10 largest exposures.
Bahri's prominence, surpassing both STC and Aramco, was not driven by a single large holding in one fund. Instead, it reflected its presence across multiple portfolios, suggesting the stock enjoyed broad support among Saudi asset managers.
Banks lead sector exposure
Bank stocks made up about SR3.25 billion, equivalent to nearly 31.2 percent of the value of funds’ disclosed largest holdings, driven mainly by Al Rajhi Bank, followed by Bank Albilad and Alinma Bank.
However, this banking exposure was not evenly distributed across the sector. Instead, it was concentrated primarily in Al Rajhi Bank, followed by Bank Albilad and Alinma Bank. This suggests that the key difference between the portfolios lies in the selection of individual banks rather than the decision to invest in the banking sector itself. However, the disclosures do not indicate the criteria fund managers used to make those investment decisions.
The energy sector came second, with exposure estimated at about SR1.67 billion through positions in Bahri and Saudi Aramco. The sector edged out basic materials by a narrow margin, with exposure to the latter reaching about SR1.62 billion, while telecom came fourth at about SR1.13 billion.
This suggests that the fund's exposure to the energy sector was not driven by Aramco alone. Bahri accounted for about 57 percent of the value of disclosed energy holdings, compared with roughly 43 percent for Aramco.
Different fund objectives and policies
The largest funds by net assets include: Al Rajhi Flexible Saudi Equity Fund, and Al Rajhi Saudi Equity Fund, as well as Al Rajhi Leading Companies Fund, and Al Rajhi Small and Mid-Cap Companies Fund.
These are joined by Al Awwal Invest Fund for Saudi Equities, Derayah Flexible Fund, and Al Jazira Saudi Equity Fund, as well as Jadwa Saudi Equity Fund (Classes A and B) and Jadwa Saudi Equity Fund II – Class A.
Despite falling under the umbrella of Saudi equities, these funds differ in their strategies and the scope of companies they invest in. The Al Rajhi Flexible Fund allows an investment scope spanning Saudi equities, initial public offerings, and traded real estate funds, aiming for high capital growth over the medium to long term.
By contrast, the Al Rajhi Saudi Equity, Al Jazira, Al Awwal Invest, and Jadwa funds focus on capital growth through Shariah-compliant Saudi equities, while the Al Rajhi Leading Companies and Small and Mid-Cap funds reflect more specialized scopes in terms of targeted company size.
Fund diversification doesn’t mean risk diversification
The 10 largest stocks combined accounted for about SR7.6 billion, representing 45.4 percent of total fund assets and nearly 73 percent of the value of the disclosed largest holdings.
This overlap means that an investor buying units in several funds isn’t guaranteed genuine diversification of return sources. Asset manager names may differ, while portfolios remain exposed to the same stocks and sectors, chiefly Al Rajhi Bank, Bahri, and stc.
Under portfolio management principles, diversification isn’t measured merely by the number of funds or stocks but by the degree of correlation between portfolio components. The more positions repeat across funds, the higher the sensitivity of their performance to shared factors, and the less benefit there is from spreading money across multiple managers.
The degree of concentration within individual funds also varied significantly: the 10 largest positions represented about 79.8 percent of the Al Rajhi Large-Cap Fund’s assets, compared with 49.7 percent for the Derayah Freestyle Saudi Equity Fund.
This means the first fund’s performance depends more heavily on the success of a limited set of choices, while the second spreads its risk across a wider number of positions not shown in the list.
