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Assets under management in Middle East grow faster at 16% to $1.2 trillion

The study found that global AuM grew at 12 per cent last year, to more than $112 trillion, a growth rate well above the seven per cent average of the previous 20 years

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The asset management industry (AuM) grew faster than the global average, rising by 16 per cent in the Middle East to $1.2 trillion (Dh4.4 trillion) in 2021, significantly above the 10-year growth average, according to a new report by Boston Consulting Group released on Monday.

The study found that global AuM grew at 12 per cent last year, to more than $112 trillion, a growth rate well above the seven per cent average of the previous 20 years.

Markus Massi, managing director and senior partner, BCG, said asset managers have been able to tap deeper into the retail segment as technology has made it economically feasible to serve clients of all sizes.

“Many large brokerage firms are using digital distribution platforms and Robo-advisors to democratise access to increasingly sophisticated investing options. Retail clients now receive data-driven personalization advice, fractional shares, and streamlined interfaces that charge low fees or no fee at all,” he said.

Another study released by analytics firm Preqin projected that assets under management in the region will continue to rise on the back of a surge in oil and gas prices.

It said Middle East-based managers had seen a contraction in AuM in 2015 and 2016, partly due to the reduction in oil prices having wider economic impacts on the region. However, since the end of 2019, AuM has increased 52 per cent. “The share of AuM taken by the two largest markets, UAE, and Saudi Arabia, has remained stable, suggesting the prosperity of the last few years has been evenly spread across the region.”

According to BCG’s report, with $100 trillion to $150 trillion in global capital deployment required to reach net-zero goals by 2050, demand for sustainable investments represents an opportunity that will dominate the sector in both the short and long term.

It projected that roughly $20 trillion to $30 trillion is expected in bond and equity allocations for asset managers, much of it frontloaded over the next few years as more investments flow into climate-transition projects.

Massi added that the growth in investor demand for net-zero compliance has become evident in increased pledges by institutions and increased flow into sustainable mutual funds and exchange-traded funds (ETFs) — with additional growth expected from the rise of climate-tech unicorns and the private investment flows into decarbonisation and virtual currencies that we began to see in 2021.

“We foresee the industry becoming competitive in ways that have to do with changes in technology and society as well as new pressures to achieve market-beating performance,” he added.

— waheedabbas@khaleejtimes.com