Market Trends of GCC Mutual Fund Industry
Emerging Leadership of Saudi Arabia in GCC Capital Markets
In GCC, there are two active asset classes within the industry: Mutual Funds and Private Equity and other Alternative Assets. Mutual funds are, by and large, a function of the size and growth of the regional capital markets. GCC equity markets underperformed global peers during the previous year, reporting significantly lower gains during the year.
Saudi Tadawul has traditionally been the biggest market in the GCC region. This is not surprising considering the relative size of KSA's economy. Qatar and UAE are placed next in the order. The Capital Markets Authority (CMA) in Saudi Arabia is also actively improving the regulatory framework for listing and corporate governance to build more depth.
GCC Mutual Fund AuM By Fund Category
Asset gathering has been difficult in the region, as seen from the low size of mutual fund AuM compared to the GDP, in spite of the abundant private wealth and liquidity. Equity mutual funds, the primary vehicle for asset gathering, were hit hard by the global financial crisis of 2008, which led most investors to pull their money out, and the industry has not recovered since then. Equity Funds are predominant in this region. Bond Funds are a relatively new product, and since the GCC debt markets have only recently seen reforms, their size is also very small. Real estate funds, a popular choice of many GCC investors, have given negative returns since 2015 and so have been unable to increase their AUM.
