UAE. GCC Mutual Fund Industry Survey 2011 was sponsored by Qatar Financial Centre Authority, PwC, Emirates NBD, Al Imtiaz Investment Company, and National Bank of Abu Dhabi.
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 said: "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 the GCC Mutual Fund Industry Survey 2011 and other economic researche and reports, please click here.
The Qatar Financial Centre (QFC) is a ﬁnancial and business centre established by the Government of Qatar and located in Doha. It has been designed to attract international ﬁnancial services institutions and major multi-national corporations in particular those operating in the reinsurance, captive insurance and asset management sectors and to encourage participation in the growing market for ﬁnancial services in Qatar and elsewhere in the region.
The QFC operates to international standards and provides a ﬁrst class legal and business infrastructure for those operating within the QFC. The QFC was created by Qatar Law No. (7) and has been open for business since 1 May 2005.
The QFC Authority is the commercial, administrative and legislative body responsible for leading the expansion of Qatar’s ﬁnancial services sector, providing a uniquely sustainable platform for regional growth in reinsurance, captive insurance and asset management.
For more information, please visit www.qfc.com.qa
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Established in the region for 40 years, PwC has ofﬁces in; Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Palestine, Qatar, Saudi Arabia and the United Arab Emirates, and has over 2,500 people. Complementing our depth of industry expertise and breadth of skills is our sound knowledge of local business environments across the Middle East.
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About Emirates NBD Asset Management
Emirates NBD Asset Management, which is regulated by the Dubai Financial Services Authority, is the asset management division of Emirates NBD Bank, the largest bank by assets in the MENA region.
The asset management entity manages approximately $1.6billion across a range of products including MENA equity and ﬁxed income funds, global risk proﬁled funds and a complete range of Shari’a compliant vehicles. The Emirates NBD managed funds are domiciled in Jersey and are regulated by the Jersey Financial Services Commission.
The National Bank of Abu Dhabi (NBAD), The Number One Bank in UAE, was incorporated in 1968 and is listed on the Abu Dhabi Securities Exchange (ADX), under stock code (NBAD). Ranked as one of the top 50 safest banks in the world, NBAD currently operates across 13 countries on four continents.
NBAD has a network of 116 branches and 500 ATMs to provide banking services to customers all over the UAE. Besides brick & mortar branches, NBAD provides 24 hour internet banking access through NbadOnline and NbadDirect, the SMS-based payment service (Arrow) as well as account access and personalised customer support through its 24-hour Call Centre.
NBAD’s overseas network stretches from Oman, Kuwait, and Bahrain in the G.C.C.; Egypt, Libya, and Sudan in Africa; UK, France, and Switzerland in Europe; Hong Kong and Jordan in Asia to Washington, D.C. in the U.S.A. Overall, NBAD has nearly 50 branches and 60 ATMs outside the UAE.
NBAD provides its customers with a wide variety of ﬁnancial services targeting all segments of the consumer and corporate markets.
NBAD is rated senior long term/short term A+/A-1 by Standard and Poor's, Aa3/P1 by Moodys and AA-/F1+ by Fitch giving it one of the strongest combined rating of any Middle Eastern ﬁnancial institution.