Dubai International Financial Centre (DIFC), the leading financial hub in the Middle East, Africa, and South Asia region (MEASA), has today published the “DIFC Wealth & Asset Management Report 2017: Mapping Opportunities in the MEASA Region” in partnership with Thomson Reuters. The Report explores the latest investment opportunities in the region, while providing a five year projection for Assets Under Management (AuM) in key MEASA countries.
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 US$436.5 billion. By 2020, the Report projects total AUM to reach US$678.9 billion. Looking specifically at the fund managers in the GCC, they expect to more than double their AUM from US$45.8bn in 2016 to US$110.9bn in 2020.
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 US$1.6bn in 2016 to US$18.9bn in 2020.
Arif Amiri, Chief Executive Officer of DIFC Authority, commented: “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% since 2012 to reach US$58.89bn in AuM at the end of 2016. Shariah-compliant investments have strong demographic demand but remain under-utilised. Representing just 1% 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% of assets of HNWIs, among the lowest of any region except Japan and North America. Alternative investments, by comparison, account for more than 15% of total assets — the highest share globally.