Value vs. Growth: The New Economy vs. Old in Saudi Arabia
In Saudi Arabia, the value-versus-growth debate is a question about which version of the Kingdom investors believe in. Value is the foundation of the economy: the banks, energy companies, and petrochemicals that built Saudi Arabia's wealth over five decades. Growth is the aspirational economy: the hospitals, consumer brands, logistics firms, and industrial players that Vision 2030 is funding into existence. For the first time, both sides of this story are accessible in a single market, in the same currency, through two Shariah-compliant ETFs listed on Tadawul.
Defining the Two Styles
Value investing centres on the idea that markets can misprice assets in the short run. A value stock trades at a discount relative to its fundamentals, with a low price-to-earnings ratio, a low price-to-book ratio, and often a meaningful dividend yield. These are typically mature companies with stable cash flows: banks, energy producers, industrials, telecoms. The investor's thesis is simple: wait for the market to recognise the undervaluation and profit from the re-rating.
Growth investing inverts the logic. Here, investors pay a premium today for earnings that don't yet exist or exist only in embryonic form. They are buying the expectation of rapid future expansion: rising revenues, widening margins, and an addressable market that compounds returns over time. The risk is that the growth story fails to materialise, or that rising interest rates make tomorrow's earnings worth less in today's money.
Two Economies on One Exchange
The Albilad MSCI Saudi Equity ETF (9412) tracks the MSCI Saudi Arabia broad market, the Kingdom's legacy economy. Financials dominate at 35%, with materials at 17% and energy at 14%. Al Rajhi Bank, Saudi Aramco, SABIC, and Ma'aden are the heavyweight anchors: capital-intensive businesses with earnings tied to oil revenues and the banking infrastructure built around them.
The AlBilad MSCI Saudi Growth ETF (9408, launched January 2024) is a deliberately different proposition. Its 50 SMID-cap holdings break down as: consumer leads at 24%, healthcare at 18%, materials and industrials each at 14%. Saudi Aramco is absent. Al Rajhi Bank does not appear. Nine healthcare companies and twelve consumer names anchor the portfolio. This is the Vision 2030 economy in ETF form: domestically driven, privately led, and structurally distinct from the commodity-linked index it shares an exchange with.
Head-to-Head: Albilad Saudi Equity vs Albilad Saudi Growth
Placed side by side, the structural differences between these two ETFs are stark. The table below compares both funds across key investment attributes from portfolio composition and sector tilt to valuation, performance record, and macro sensitivity.
The Aramco Variable: Oil as the Style Switch
Saudi Aramco roughly 10-11% of the TASI free float nks value-style performance directly to the oil price. Rising Brent simultaneously expands Aramco earnings, strengthens government revenues, and improves bank balance sheets, creating a compounding tailwind across the value index. The Growth ETF, with no Aramco exposure and minimal energy weight (4%), sits outside this transmission mechanism entirely.
This dynamic defined 2024's performance gap. With Brent averaging $80/bbl and Aramco declining, the energy giant subtracted an estimated 176 TASI index points, the single largest drag on the value index. Growth returned +6.6% against value's +0.6%. Then Q1 2026's Hormuz-driven oil spike to $119.14/bbl reversed the script: TASI surged 6.05%, energy stocks +15%, banks +10%.
The rule of thumb
Brent consistently above $85/bbl amplifies the value premium through Aramco and bank earnings. Below $75/bbl, the Growth ETF's oil-free composition and Vision 2030 domestic demand tailwind reassert themselves. At $119.14, the current environment is an acute value moment, not a structural shift.
Performance: The Cycle Playing Out.
Neither style has permanently dominated. Growth outperformed in 2024 when oil was soft; value held up better through 2025 as oil fell and rates stayed elevated; value then surged in Q1 2026 on the oil shock. Both styles are expressions of the macro environment that Saudi Arabia rewards in any given moment.
Vision 2030 and the Long-Term Growth Case
Value's current advantage is cyclical; growth's structural tailwind is not going away. The companies executing the Kingdom's diversification agenda, the hospitals, construction materials firms, consumer service providers, and industrial suppliers that populate the Growth ETF's basket are growing their revenues independently of the oil price cycle. The Nomu parallel market delivered a striking +28% return in 2024 against TASI's +1%. The Growth ETF targets this same domestically focused, Vision 2030-aligned universe through a screened, SMID-cap, Shariah-compliant methodology. Its AUM of SAR 292 million, accumulated in just 27 months, reflects early but growing conviction in the theme.
What to Watch: Three Rotation Signals
The oil price
Above $85/bbl, Aramco earnings expand, government revenues strengthen, and banks follow, all feeding into the value index. Below $75/bbl, energy becomes a headwind, and the Growth ETF's oil-free composition provides relative shelter. The current Hormuz-driven spike to $119.14 igeopoliticalca; historically, these normalise, and when they do, the growth premium tends to reassert itself.
SAIBOR and the rate environment
Saudi monetary policy tracks the US Fed through the riyal-dollar peg. Elevated SAIBOR above 5% through 2024-2025 widened bank margins and supported the financials-heavy value index. As the Fed eases and SAIBOR follows, value's rate-driven edge compresses, making growth's earnings trajectory more attractive on a relative basis.
Vision 2030 capital deployment
PIF quarterly disclosures, ministry capital budgets, and Tadawul's IPO calendar are the most direct forward-looking indicators for the Growth ETF's opportunity set. Fifteen companies were listed on Tadawul in 2025 alone. A sustained IPO pipeline is a growth-positive structural signal that operates independently of the oil cycle.
Conclusion: Both Belong
The data across three years makes the case clearly: neither style has permanently dominated, and neither will. The legacy economy anchors a portfolio in income, dividends, and oil-cycle upside. The new economy positions it for the long-term compounding that Vision 2030 is assembling, sector by sector. The proportion between them should flex with oil, rates, and the pace of domestic diversification. The tools to execute this strategy cleanly, in riyals, with Shariah compliance, on a single regulated exchange now exist on Tadawul.
