The research firm Cerulli has estimated total managed assets in the Middle East to be more than $1.6 trillion, taking into account mutual funds, discretionary portfolios, and the powerful sovereign wealth funds.
The Middle East retail mutual fund market, estimated by Cerulli Associates to be worth $100 billion at year-end 2007, is expected to grow by 15% over the next five years. This strong growth will be fueled by interest in both domestic and global assets.
Surveys with both foreign and domestic investment managers conducted by U.S.- and Singapore-based research firm Cerulli Associates, found that 60% of mutual fund assets are currently in onshore funds, the result of expanded local fund manager operations and improved sentiment amid the post-2006 local stock market recovery.
Demand for offshore funds is also expected to grow, but foreign fund managers are likely to continue to focus on the region’s institutional assets for the time being.
Cerulli’s survey of foreign fund managers revealed that over 90% of their business in the Middle East is institutional, sourced largely from sovereign wealth funds and, to a lesser extent, family offices and corporations.
There is also increasing retail interest in Sharia-compliant products. Although, with the exception of Saudi Arabia, such funds still represent the minority. Cerulli expects a ramp-up in Sharia offerings by foreign managers once a critical mass of funds have been established, possibly within 12 months.
The Cerulli Report: “Asset Management Opportunities in the Middle East” is the first report to be compiled and published by Cerulli on the Middle East industry.
The report covers market sizing, product development trends, and distribution dynamics in the region. The report is focused on seven key Middle Eastern markets: Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, the United Arab Emirates, and Egypt.