Assets Under Management In MEA To Hit $1.5 Trillion By 2020 – PwC

Assets under management (AuM) in the Middle East and Africa will rise to $1.5 trillion by 2020, up from $0.6 trillion in 2012, representing a compound annual growth rate (CAGR) of nearly 12 per cent, according to a new report by PwC.

AuM growth in the Middle East will be mainly driven by positive economic outlook, family businesses and the population demographics, the report said.

“Diversifying economies, great investment opportunities and favourable regulation complemented by highlight events, Dubai Expo 2020 and Qatar FIFA World Cup 2022, will attract the capital inflow into the region,” it said.

“Family businesses in the Middle East are very powerful and influential, and unlike other economies, 75 per cent of the private sector activity is controlled by family businesses.

“The younger generation of these families consider themselves entrepreneurs as well as people who run SMEs,” PwC said.

The young population in the region also shows the strong potential of pension fund growth, it added.

The report also found that MENA based high net worth individuals (HNWI) are moving their wealth back from developed markets to the region.

Asset managers and private banks have doubled their share of assets in the past decade, and foreign private banks are increasingly looking to set-up operations in the GCC.

While penetration of the asset management industry in the MENA region is still low compared to global markets – mutual funds under management was around 2.5 per cent of market capitalisation in 2012 – the potential available to local and international players is huge, stated PwC.

Graham Hayward, Middle East Financial Services leader at PwC, said: “Strong branding and investor trust in 2020 will only be achieved by those firms that avoid making mistakes that attract the ire of investors, regulators and policymakers.

“Asset managers must deliver the clear message that they deliver a positive social impact to investors and policymakers.

“The coming years will bring the industry higher volumes of assets than ever before which places more responsibility on firms to manage these assets to the best of their collective ability. Asset managers must clearly outline the value they bring to customers while being fully transparent over fees and costs,” he added.

Globally, the report found that AuM will reach $101.7 trillion by 2020, from a 2012 total of $63.9 trillion, representing a CAGR of nearly six per cent.

PwC also stated that AuM in the SAAAME (South America, Asia, Africa, Middle East) economies are set to grow faster than in the developed world in the years leading up to 2020. However, the majority of assets will still be concentrated in the US and Europe.