The GCC’s asset management industry is set for a decade of steady growth thanks to increased foreign investment and economic diversification.
This is the finding of a report from rating agency Moody’s which cites initiatives such as Saudi Arabia’s Vision 2030 programme as a means to stimulate private investment, attract more international investors and ultimately spur more growth in the asset management industry.
But the report’s author, senior credit officer Vanessa Robert, also notes that the growth will create other challenges for asset managers “as increased asset flows test their capacity constraints, and as a more sophisticated client base demands a broader range of products and lower fees”.
Moody’s estimates the GCC market has $260 billion of assets under management with Saudi Arabia accounting for nearly half that total. The majority ($200 billion) is invested via managed accounts with collective investment vehicles accounting for the remainder.
Capacity constraints may be exacerbated by the sector’s concentration on traditional asset classes in local markets, states Moody’s. Consequently, the larger GCC firms that have diversified their offerings to take in alternative and multi-asset investments will have a competitive advantage.
The report also notes that while the regulatory environment is improving, there needs to be more rigorous supervision if certain jurisdictions are to compete with Western markets.
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