Gulf investors ‘prefer emerging markets’
Dubai, May 26, 2010
Middle East investors are looking to invest more in emerging markets than in North America, Europe or Japan, lured by the higher returns such regions offer, a study released by US-based fund manager Invesco showed.
In a report published on Wednesday, the global money manager said about 82 per cent of the more than 200 participants it surveyed forecast a preference for exposure to emerging markets in the next three to five years, compared with 30 per cent for North America and 14 per cent for Europe.
"There is more interest in emerging markets as people all around the world look for absolute returns," Nick Tolchard, head of Invesco Middle East told reporters.
The Gulf Arab region is an important source of funds for global asset managers who look to tap wealth from the oil-rich region's sovereign wealth funds and family offices.
The study also showed Gulf investors have a short-term investment horizon, Invesco said. About 38 per cent of retail respondents have a time horizon of less than a year, while only 12 per cent of institutional investors have an investment horizon beyond five years.
"Perhaps the most surprising finding was the short-term and highly volatile investment attitudes in the institutional sector," Tolchard, who estimated the region's asset management industry to be $2 trillion, said.
The Invesco study included a variety of Gulf investors, ranging from sovereign wealth funds to retail bank advisers and pension funds.
Most Gulf investors have become more risk averse in the last six months to a year, with sovereign wealth funds in the region looking more at alternative investment strategies than in the past, the study showed.
"Many sovereign wealth funds have started to invest more passively, so they have been looking at index trackers more than direct investments. We see that as a cyclical trend, where they are perhaps less prepared to take risk," Tolchard said. – Reuters