A new report from Cerulli Associates, a global research and consulting firm, in partnership with Insight Discovery Limited, finds that assets under management (AUM) of the institutional investors that are based in the six Gulf Cooperation Council (GCC) countries amount to around $3.5trn.
The report, Asset Management in the Middle East 2018: Pockets of Addressability, highlights three very different pools of capital available to international asset managers in the GCC countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
The most important institutional investors are the dozen or so sovereign wealth funds (SWFs).
Assets under management of the SWFs that are available to international asset managers is estimated at around $1.2trn. This amount includes holdings of exchange-traded funds and other indexed products. In a market that is notoriously opaque, it is not clear how much of the AUM of other institutions are available to foreign managers.
Cerulli says it believes there are opportunities for global financial services groups with well-established private banking franchises who are already catering to 700,000 high-net-worth individuals (HNWIs) who are based in the Middle East (which extends beyond the GCC countries).
The consulting firm estimates that £800bn is available for asset managers even after allowing for assets that are held in cash, tied up in HNWI-oriented businesses or invested in physical real estate.
Cerulli is confident there will always be investment advisers in the GCC countries. In all six economies, the work forces of nationals are too small to provide the service needed.
The expatriates who fill the gaps – at all levels in the job market – are almost all looking to take advantage of disposable incomes that are much higher than they could earn at home, and to save a nest egg.
As the GCC economies grow, demand for expats’ services will grow, and the potential demand for services of the advisers will expand as well. This creates a rising opportunity for asset management firms, international life companies, and others.
Headquartered in Boston with offices in London and Singapore, Cerulli Associates is a global analytics firm, providing financial institutions with guidance in strategic positioning and new business development.