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A new class of investment vehicles may soon hit the market: The Capital Market Authority (CMA) published draft regulations (pdf) proposing to roll out Simplified Investment Funds (SIFs) in a bid to deepen and draw capital into the asset management industry. The proposed rules, part of the CMA’s broader push to diversify the Kingdom’s capital markets, will be open for public consultation on Istitlaa until Thursday, 6 November.
The pitch: SIFs will allow fund managers and unitholders to set their own contractual terms, including liquidation rules, unit classes, and reporting policies. The new fund structure is designed to cut costs and boost flexibility, explicitly modeled after Limited Partnership structures used globally, the regulator said in a separate statement.
Locally licensed managers will be allowed to offer SIF units only to institutional clients, while those holding an offshore securities business license may market them to non-resident foreigners, government entities, local banks, ins. firms and other qualified investors. Funds formed as special purpose entities would also be exempt from appointing a custodian.
The framework also introduces a new investor-protection mechanism, requiring managers to keep detailed registers of unitholders, maintain records for 10 years, and ensure independent audits of annual financial statements. Real estate exposure would be allowed only for funds run by offshore-licensed managers.
IN CONTEXT- The move builds on the CMA’s broader plan to align local regulation with global fund standards. The new regime complements the Offshore Securities Business License the CMA rolled out for consultation in June, which allows capital market institutions to offer securities services abroad and manage Saudi assets for international clients, cutting through red tape with lighter capital and operational requirements.
DATA POINT- The domestic asset management sector surpassed SAR 1 tn (USD 267 bn) in 2024, up nearly 21% y-o-y, with investment funds accounting for the bulk of the total, the press release said. S&P Global expects the industry’s AUM to climb to about USD 500 bn by 2030, up from USD 295 bn as of March, driven by regulatory reforms, broader product diversity, and easier market access.
