The GCC asset management industry, with roughly 100 asset
management companies, manages approximately $29 billion in assets in about 325
funds as of March 31. Geographically, Saudi Arabia country funds account for 62
percent of the total, followed by Kuwait country funds with 19 percent share.
In terms of products, money market funds lead the pack with a 50 percent share,
closely followed by equities at 47 percent while the remainder is in fixed
income and other funds. Of the total, Islamic funds manage $17.6 billion in assets
implying a share of 61 percent. In terms of number of funds, GCC/MENA mandated
funds top the table with 131 funds, followed by Saudi Arabia country funds with
109 funds and Kuwait country funds with 51 others. Contrary to pattern seen in
assets under management, there are more conventional funds (176 funds) than
Islamic funds (149 funds).
Kuwait, with $5.4 billion of assets, had the highest AUM
to GDP ratio of 4.1 percent, closely followed by Saudi Arabia with AUM to GDP
ratio of 4 percent. The ratio for all other countries was less than 0.5 percent
implying lack of institutional presence in the investment segment.
Most GCC country funds adopt local stock market indices
as their benchmark. Among global index providers, MSCI and S&P are the most
active in the region. Majority of Shariah-complaint funds use S&P indices
as benchmarks since MSCI discontinued Saudi securities from its indices.
In Kuwait, 7 out of the 20 conventional equity funds use
KSE weighted index as their benchmark. Four funds use KIC index (Kuwait
Investment Company). Most GCC/MENA equity funds use S&P GCC Index and
S&P Pan-Arab Shariah Index as benchmarks for conventional and Islamic
funds, respectively.
The ranking of GCC countries in terms of number of funds
domiciled, indicate that country of domicile relates to the size of each
country's asset management industry with only a few exceptions. There were 140
funds domiciled in Saudi Arabia managing $19.3 billion in assets, followed by
Kuwait with 58 funds managing 5.7 billion. Bahrain, true to its reputation as a
financial hub, has 39 funds with $1.1 billion in assets. Most of the funds
domiciled in Bahrain are mandated to invest in GCC/MENA region.
Given that local investors make up the bulk of
participants in GCC/MENA funds, local markets tend to suffice as domiciles for
these funds, Saudi Arabia, Kuwait and Bahrain being the most popular choices
and accounting for 73 percent of the total.
Despite the fact that the majority of funds across the
region are of the "plain vanilla" equity variety, there are new and
innovative types of funds which are being introduced to deal with the unique
dynamics and opportunities presented by the GCC/MENA markets.