GCC fund managers expect to more than double their assets under management (AuM) from $45.8 billion in 2016 to $110.9 billion in 2020, according to a new report published by the Dubai International Financial Centre (DIFC).

Published in partnership with Thomson Reuters, the “DIFC Wealth & Asset Management Report 2017: Mapping Opportunities in the Measa Region” explores the latest investment opportunities in the region, while providing a five year projection for AuM in key countries in the Middle East, Africa, and South Asia (Measa) region.

At the end of 2016, total AuM by fund managers in Measa’s key financial centres (India, South Africa, Nigeria, Egypt and the GCC countries) was $436.5 billion. By 2020, the report projects total AuM to reach $678.9 billion.

Dubai will reinforce its status as the region’s leading financial hub with new legislation and regulation expected to attract inward investment. Fund managers in The United Arab Emirates are expected to see their AuM grow from $1.6 billion in 2016 to $18.9 billion in 2020.

Arif Amiri, chief executive officer of DIFC Authority, said: “DIFC has identified the wealth and asset management industry as having huge potential for growth over the next five years, which is why we are making a number of enhancements to our platform. From the DFSA’s recently updated Collective Fund Regime to potential legislative changes on the horizon, we believe Dubai and DIFC can play a central role in attracting assets to the region and preparing it for the future of the financial services industry.”

Continued growth in Islamic asset management

Islamic asset management continues to grow, at a moderate compound annual growth rate (CAGR) of 2.44 per cent since 2012 to reach $58.89 billion in AuM at the end of 2016. Shariah-compliant investments have strong demographic demand but remain under-utilised.

Representing just 1 per cent of global Islamic funds, Shariah-compliant pension funds could be a key contributor to the Islamic fund management industry in the years ahead.

Expansion of middle class presents opportunities

The report also highlights the massive expansion of the middle class in emerging markets. This has created significant opportunities, with financial sectors that were previously focused on exporting capital now reinvesting that capital in those requiring finance at home. Financial centres in the GCC have a particular opportunity because there are opportunities for investment both regionally and across the wider African and Asian regions.

Highest global share for alternative investments

The region is particularly attractive for fund managers in the alternative investments sector. In contrast to the perception that investors from the Middle East are heavily concentrated in real estate, these make up just under 20 per cent of assets of HNWIs, among the lowest of any region except Japan and North America.  Alternative investments, by comparison, account for more than 15 per cent of total assets -- the highest share globally.

The Dubai International Financial Centre (DIFC) is one of the world’s top ten financial centres, and the leading financial hub for the Middle East, Africa and South Asia.  The Centre provides a world-class platform connecting the region’s markets with the economies of Europe, Asia and the Americas and facilitates growth in South-South trade and investment. – TradeArabia News Service