Mena AuM saw $100bn increase in 2022

Assets under management (AuM) for Middle East asset managers grew by US$100 billion in 2022, exceeding the $1 trillion mark.

According to data from Boston Consulting Group (BCG), AuM grew by 7% to reach $1.3 trillion. Meanwhile, global AuM fell by 10% or $10 trillion to $98 trillion.

Yet despite the boost in AuM, Mena-based managers must review their operations if they are to return to historical levels of profitability, according to the BCG report titled ‘Global Asset Management 2023: The Tide Has Turned’

The report states that since 2006, 90% of global managers’ revenue growth came from market performance, and in an environment where this is no longer guaranteed, “it is now time for a real transformation”, said Markus Massi, managing director and senior partner at BCG.

The report estimates that firms globally will need to reduce their costs by 20% and generate at least 30% of their revenue from higher margin products, such as alternative assets and private markets – two asset classes that are historically popular with Mena investors, even though there is a limited availability when it comes to the regional property market.

BSG also notes that there is a more positive outlook in terms of economic growth for the Middle East, thanks to oil revenues and relatively positive equities markets.

Nevertheless, asset managers in the region must still seek to transform their operations and alter their strategies in order to boost profitability.  

“In an environment where growth is no longer guaranteed, where fees are being compressed, and where passive investing is increasingly popular, the Middle East’s asset management industry is facing a crucial turning point. In fact, it is now time for leaders to re-examine their organisations’ strategies to take their fair share in the market growth and accelerate profit contributions,” said Farouk El Hosni, principal at BCG.

©2023 funds global mena

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