Traders busy at work at the Bahrain Stock Exchange. File / Reuters
The disruptive nature of the COVID-19 health crisis has been relentless, with repercussions involving all areas of society. Yet despite the unprecedented turbulence of recent times, the asset management industry in the Middle East has emerged in a favorable position, according to a new report from the Boston Consulting Group (BCG). The report, titled “Global Asset Management 2021: The $ 100 Trillion Machine,” illustrates that Middle East assets under management (AuM) have experienced double-digit growth of late, rising 11% from 1.1 trillion dollars in 2019 to $ 1.2 trillion. in 2020.
“Like all industries, the resilience of the asset management industry was tested in 2020, with an initial disruption of the epidemic and subsequent economic tailwinds presenting a period of significant uncertainty for industry and its incumbents, ”said Harold Haddad, Managing Director and Partner, BCG. “However, the Middle East has triumphed in the face of adversity, and it is now evident that the region has entered a position of strength in 2021 after healthy returns.”
According to the report’s findings, the growth in assets under management in the region is mainly attributed to an increase in sovereign wealth funds (SWFs), mainly due to the strong performance of the capital markets. Many sovereign wealth funds had high exposure to equities in developing and emerging markets, faring well as the financial landscape regained some degree of stability before the pandemic. In addition, another main driver of the growth in assets under management has been retail investors. In the Middle East, retail mutual funds grew 12% in 2020, with strong global market performance driving this result.
BCG’s 19th Annual Study of the Global Asset Management Industry explores the extent of growth that other markets have accumulated under challenging conditions, outlining the main drivers while providing comprehensive explanations. Globally, net inflows to the asset management industry reached $ 2.8 trillion in 2020, or 3.1% of total assets under management at the start of the year, compared to a historical average of between 1 and 2% during the previous decade. Once again, retail investors turned out to be the main driver of growth in assets. Global portfolios of retail assets under management grew 11% globally in 2020, accounting for 41% of global assets to $ 42 trillion. Institutional investments have also grown at a similar pace to reach $ 61 trillion, or 59% of the global market.
“The asset management industry is emerging from the recent crisis with notable changes. Although the operating environment continues to change, the growth recorded from 2019-2020 – in such a precarious climate – implies further development in due course as countries continue to re-emerge, with many opportunities that will certainly arise in the future. as new trends accelerate, ”said Mustafa Bosca. , Managing Director and Partner, BCG.
“From the point of view of the players in the sector, the objective for the future will be to pursue a strategy of sustainable growth that revolves around differentiation and advantage, with models of customer engagement, products of investment, operating models and a talent management strategy, all potential areas that could be priorities. ”
BCG’s 2021 Global Asset Management Report examines how new realities – for example, in markets and technology – will shape future industry leaders and why specific areas, such as private markets, ESG investments and advanced data and analytics, are likely to play a key role. Given the opportunities for growth and transformation of the asset management industry in the coming years, the study also explores the outlook and projections for private markets. BCG highlights the potential for significant progress within private markets, especially for companies that can successfully enter the retail market, systematically use data and analytics to improve decision making and integrate metrics Significant ESG.
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