Responding to an evolving landscape in Saudi Arabia
Foreword
Saudi Arabia’s asset management industry looks resilient in 2021, with official stock market listings and the increased presence of foreign investors set to be the major trends this year.
According to a report by the Capital Market Authority (CMA), the total value of assets held by public and private investment funds in Saudi Arabia grew by 18% year-on-year (YoY) to SAR 523.7 billion in 2021.
By the conclusion of the year, there were 751 investment funds, comprising 256 public funds and 495 private funds, a new high. The investment funds are made up of a collection of securities that are chosen based on certain criteria to meet the fund\’s investment goals. It is split into two categories: public and private funding.
The asset management industry is expected to see increased completion in the market and investors seeking more value from their fund managers, firms will need to differentiate themselves by demonstrating diversification of investment ideas to generate alpha.
According to experts, Saudi asset managers should investigate and analyze other potentially lucrative markets for their customers in the developing world. While the UK, US, and China may not now provide significant returns on investment, areas such as Malaysia, India, Bangladesh, Indonesia, Greece, Romania, Eastern Europe, Poland, and other developing countries might be viable options for Saudi investors.
Positive Future Posture:
Environmental, social, and governance (ESG) investments are becoming increasingly popular
around the world, and it\’s only a matter of me until ESG becomes a key priority for both
investors and fund managers in Saudi Arabia.
It is expected to see increased completion in the market and investors seeking more value
from their fund managers, firms will need to differentiate themselves by demonstrating
diversified investment ideas to generate Alpha.
The risk appetite of retail investors has already been decreased and as part of their continued
risk management, they are likely to adopt a diversification agenda.
Most importantly, there is an uptick in the deployment of necessary capital to start-ups and
entrepreneurs through venture capital or private equity-type investments arising from imminent
privatizations.
As risk/reward appetite changes in the market and fund managers modify their investment
strategies properly, fund managers are expected to present a diversified investment suite to
potential investors, in line with the global trend.
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