Saudi Arabia’s asset management industry surpassed SAR 1 tn in assets under management (AUM) in 2024, marking over 20% growth as the sector moves steadily towards its SAR 1.3 tn target by 2026, according to Fitch Ratings. The expansion is driven by increasing investments, favorable demographics, ongoing reforms, and digital transformation. However, global factors such as tariffs and oil price fluctuations pose risks to the market.

Private funds lead the way: Private funds, mainly focused on real estate and equities, hold about half of the industry’s AUM, followed by discretionary portfolio management and public funds. The government aims for AUM to make up 40% of GDP by 2030, up from 26% in 2024.

International firms are stepping up to compete: Although Saudi bank-affiliated asset managers still generate two thirds of the industry’s revenue, they are facing increasing competition from global firms. A roster of heavy-hitters such as BlackRock, Goldman Sachs, Morgan Stanley, Citigroup, and Mizuho Bank were permitted in 2024 to establish their regional headquarters in the Kingdom.

Strong appetite for Islamic funds: “Saudi Arabia’s asset management sector remains the largest in the GCC, with strong demand for sharia-compliant products,” said Global Head of Islamic Finance at Fitch Bashar Al Natoor. Nearly all mutual funds on the Saudi Exchange are sharia-compliant, Al Natoor added.

The Kingdom continues to lead GCC equity markets, with foreign investor ownership in Saudi stocks reaching 10.8% in 9M 2024. The debt market, dominated by sukuk at about 63%, also remains a key asset class, with the majority of Fitch-rated Saudi sukuk being investment-grade.

Tags: