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November 26, 2015 | 12:45 | Dubai
Historically, asset management activities in the Middle East have focused on Sovereign Wealth Funds (SWFs) and other institutional investors. However, asset managers are now increasing their range of investment fund products in the region to specifically target the private investors. At the same time, regulatory frameworks are evolving across the different regional financial markets (e.g. DIFC, ADGM, QFC) and will further help the development of the region’s asset management industry, says a report by Deloitte. The report further notes that the Middle East asset management industry is gaining in maturity and is no longer a purely institutional business.
“The current generation’s investments are characterized by highly liquid, low-risk assets with emphasis on capital protection. On the other hand, the younger generation has a more aggressive investment approach with higher expected returns, shorter time horizons, and seeks wealth generation rather than wealth preservation. This new generation of investors also shows an increased interest in professionalizing their private portfolios in terms of asset allocation and diversification. This creates opportunities for asset managers to provide professional solutions to those investors,” it notes. It also adds that asset managers need to continue developing propositions tailored to private client needs. The mass affluent segment is particularly interesting for asset managers. Those investors are generally well educated and might already be served with existing products from global asset managers. However, given the increase in the number of households, there is likely growth potential in this segment, as they need increasing amounts of financial advice when moving along their career paths and growing their net wealth.