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ME assets under management up 10pc

Dubai, September 4, 2011

The assets under management soared by 10 per cent in the Middle East and the South Africa region above global average thus retaining the momentum of a year ago when the growth rate was 13 per cent, said a report.

The Boston Consulting Group (BCG) in its annual study of asset-management industry, stated that professional managers of institutional assets and retail mutual funds retained a good momentum in 2010 in the Middle East and around the world, confirming the rebound from the global financial crisis.

However, building on the recovery and achieving a stable growth trajectory will remain a tall challenge, the report added

In another of its finding, the BCG report stated that in the Middle East region, the professionally managed assets amount to roughly $1 trillion, or a quarter of assets in the region.

While BCG expects total assets (both direct and indirect) to grow by around 8 per cent in the coming years, professionally managed assets are estimated to grow at a slightly stronger rate of around 9 to 10 per cent.

The report, 'Building on Success: Global Asset Management 2011,' is BCG’s ninth annual study of the worldwide asset-management industry.

It draws on a detailed benchmarking of leading industry competitors that BCG conducted early in 2011. The report also reflects a comprehensive market-sizing effort.

According to the report, the global value of professionally managed assets rose by 8 per cent to $56.4 trillion in 2010.

The increase, which followed a gain of 13 per cent in 2009 and a decline of 17 per cent in 2008, was driven principally by the continuing recovery of equity markets, with net new inflows remaining marginally positive.

There was wide regional variation in assets under management (AuM) expansion in 2010, the report stated.

Latin America, with an increase of 18 per cent, posted the strongest growth. In North America, AuM rose by 8 per cent, led by the US (8.5 per cent).

AuM in Europe rose by 7 percent, with considerable variation across countries. Japan and Australia, the two largest markets in the Asia-Pacific region, posted a combined AuM increase of 2 per cent (1 and 4 per cent, respectively), while AuM rose by 11 per cent in the rest of Asia, slower than in the pre-crisis years.

The further recovery of AuM in 2010, along with a shift in asset structure, translated into a slightly improved profitability for asset managers, the report said.

On asset class structure, the BCG said the regional investments will continue to be mostly direct. Overall, the asset class mix will stay mostly unchanged.

Dr. Sven-Olaf Vathje, a partner and managing director at BCG Middle East, elaborated on the findings for the Middle East.

'While sovereign wealth funds have often maintained a stable share of professionally managed assets, we have found that private households demonstrate a long term trend to increase their professionally managed assets.'

'This trend is also evident among insurers, who seem to be increasing their professionally managed assets as part of a broader asset management professionalization drive,' he added.

Markus Massi, a partner & managing director at BCG Middle East, said, 'To pursue growth across borders in the Middle East, asset managers must first develop a clear view about which markets they would like to enter given their current capabilities and resources.'

'Just as important, they must accurately assess the level of competition in the new market as local distribution power and connections are key and investor preferences and institutional set-up vary by GCC market,' Massi observed.

'Finally, they must decide where they do not want to be in terms of regions, products, and client segments. Every asset management company cannot stand for all products – credible specialization and customer focus is key,' he stated.

“Surprisingly, some asset managers begin their expansion initiatives without fully addressing these basics” he added.-TradeArabia News Service




Tags: Middle East | BCG | Assets under Management | Boston Consulting |

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