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Shashank Srivastava, Acting CEO of the Qatar Financial Centre Authority, said, “The QFCA is delighted to be a sponsor once again of this latest GCC Mutual Fund Industry Survey. It is an invaluable and comprehensive source of current opinion and information on the mutual fund industry in our region and demonstrates the significant development potential of the industry here for all market participants. We at the QFCA are strongly supporting this development and, in particular, the growth of Qatar and the QFC as a regional hub for asset management, offering firms one of the most business friendly tax environments, a legal system based on English common law, efficient administration and a robust regulatory regime.”
Michael Tomalin, the Group Chief Executive of the National Bank of Abu Dhabi stated “this is the second edition of the GCC Fund Survey produced with the support of a range of participants from Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates active in the asset management space in the region. We are excited to be part of a publication that is the result of industry wide collaboration and invite others to take part as well. We believe the extensive international distribution of the GCC Fund Survey is an excellent way to showcase the region to global investors”.
Graham Hayward, Financial Services Partner at PwC said: “It has been a great pleasure for PwC to support this excellent publication which collates and analyses information on the GCC mutual fund industry. This survey will provide a valuable source of reference for anyone with an interest in the Funds sector."
At the end of June 2011, the survey identified 480 funds with assets of US$ 34.1 billion. The dataset includes locally domiciled funds, local company sponsored funds irrespective of domicile, and funds with the GCC or one of the constituent markets as their geographic focus.
In 2011H1, GCC domiciled fund assets decreased by 6% from end-2010 (US$ 1.97 billion) for funds in the dataset. There were an estimated US$ 1.63 billion in net outflows from these funds, with the remainder of the decline in fund assets being attributable to market movements. in 2010, GCC domiciled fund assets increased by 7% (US$ 2.3 billion) based on selected data. There were net inflows of just US$ 205 million in 2010. Assets under management at top GCC companies have declined compared to data in the 2010 edition of the Fund Industry Survey. In contrast, top global asset managers have increased assets under management.
Global mutual fund assets stood at US$ 25.9 trillion (+14% y-o-y) at the end of 2011Q2 in 71,030 funds according to data compiled by Investment Company institute (ICI) from 40 countries. The recovery in mutual fund assets largely emanated from the rebound in global equity prices from a year earlier. Global fund assets rose by 1.2% q-o-q at end-2010Q2. Worldwide funds experienced US$ 106 billion in net inflows in 2011Q2 (net inflows were US$ 78 billion in Q1) according to ICI, with continued flows into long term funds, while short term funds saw outflows. Money market funds have experienced outflows since 2009Q1 due to a near zero interest rate environment. Equity fund assets were roughly unchanged compared to the first quarter, but were higher on a year on year basis and compared to end-2010. MSCI World index was up by 27.8% y-o-y (4% from end-2010) in June 2011. It has since declined 11% through end November 2011 with fears of a Euro break-up and double dip recession. The strengthening of the US$ in the second half of 2011 means that global fund assets will also be lower in 2011H2, in part, due to the exchange rate effect weighing on European fund assets.
At the end of June 2011, this survey identified 480 funds (with assets of US$ 34.1 billion) that comprise its dataset and includes locally domiciled funds, local company sponsored funds irrespective of domicile, and funds with the GCC or one of the constituent markets as their geographic focus. The dataset covers 417 locally domiciled funds (assets under management US$ 31.9 billion), and 304 funds with the GCC or one of the constituent markets as their geographic focus (assets under management US$ 28.1 billion). In terms of locally domiciled funds, Saudi Arabia accounted for 57% of the count, but 73% of assets based on the selected data (solely indicative given its incomplete nature).
In 2011H1, GCC domiciled fund assets decreased by 6% from end-2010 (US$ 1.97 billion) for funds tracked in our database. There were an estimated US$ 1.63 billion in net outflows from these funds, with the remainder of the decline in fund assets being attributable to market movements. The decrease was primarily attributable to a US$ 1.43 billion decrease in trade finance fund assets.
Trade finance funds saw significant net outflows estimated at US$ 1.5 billion. Equity fund assets fell by 3%, with net outflows accounting for less than a third of this decline and the remainder due to market movements. In 2010, GCC domiciled fund assets increased by 7% (US$ 2.3 billion) for funds tracked in our database. There were net inflows of US$ 205 million in 2010. The increase was primarily attributable to a US$ 1.16 billion increase in trade finance fund assets. Trade finance funds saw significant net inflows estimated at US$ 1.1 billion. Equity fund assets rose by US$ 1.1 billion, but actually experienced net outflows. The rise in equity fund assets was attributable to market movements.
Background to the GCC Mutual Fund Industry Survey 2011 Dr. Giyas Gokkent, Group Chief Economist | National Bank of Abu Dhabi Another challenging year has gone by for fund managers in the Gulf region. Asset prices continue to be under pressure and so are the income streams of fund management companies. These are tough times for the asset management industry, but strides have been made on a number of fronts, nevertheless. For example, product ranges are broadening. Regulators are raising the bar and striving for greater investor protection which will benefit the industry in the long term.
Asset managers in the United Arab Emirates are constructively engaging with regulators to contribute to the implementation of international best-practice and, in the process, also coalescing into a tentative investment management association – a first in the region. Data availability on the sector is also improving and will, no doubt, continue to do so. Index companies are getting closer to reclassifying some of the local markets to emerging market status from the present frontier category in light of regulatory and infrastructure improvements.
The twin goals of the book remain unchanged: to provide a description of the ‘visible universe’ of the GCC mutual fund industry within the constraint of data availability and continue to act as a catalyst for the development of the regional fund industry. This year’s edition has significantly expanded coverage from last year’s dataset. It includes a wider comparison of various jurisdictions in the region and also provides a directory at the end of each chapter.
To download/read GCC Mutual Fund Industry Survey 2011 and other economic researches and reports, please visit http://www.nbad.com/economic/index.php
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