Assets under management in the Gulf saw the strongest performance in over a decade, growing 10 per cent in the past year to $2.7 (Dh9.9) trillion, as per a Boston Consulting Group report.
The retail segment was the highest performing sector, recording a growth of 14 per cent while institutional assets increased by 9 per cent. While institutional assets continue to dominate the regional market, retail assets are growing at a faster pace, with retail representing 7 per cent and institutional assets accounting for 93 per cent of total regional assets.
The UAE commanded the second-highest share of retail mutual funds and Exchange Traded Funds (ETFs) across both the Gulf and the wider Middle East, preceded by Saudi Arabia and followed by Kuwait.
Stay up to date with the latest news. Follow KT on WhatsApp channels.
Saudi’s General Organization for Social Insurance Public Pension Agency (GOSI-PPA) remains the largest pension fund in the region, with Kuwait’s WAFRA maintaining its position as the second largest. Among sovereign wealth funds, the Kuwait Investment Authority recorded the largest externally managed AuM, followed by the Abu Dhabi Investment Authority.
Reduced costs, increased research coverage
Globally, BCG’s report finds that growth is becoming more concentrated among leading firms with scale and distribution access. Revenue growth is decoupling from asset growth as fees decline, while traditional economies of scale are being offset by rising technology investment and fee pressure. All in all, these trends indicate a more competitive environment in which only a subset of firms are positioned to capture disproportionate growth.
The basis of competition is also undergoing a structural shift, with AI accelerating it by enabling new forms of scale. The consulting group estimates that asset managers could reduce costs by 25 to 35 per cent over the next three to five years, while increasing research coverage two to five-fold. Additionally, it expects client coverage per relationship manager to increase three to five-fold with faster and more scalable personalization.
AI allows firms to scale without proportional headcount increases, fundamentally changing the economics of growth, the report noted. However, most firms remain in early adoption stages, focused on pilots rather than full transformation. Those that fail to redesign their operating models risk falling behind AI-native competitors that can scale faster and operate more efficiently, it said.
Emerging forces in the market
Alongside AI, BCG’s global report identifies tokenization and digital assets as emerging forces that could reshape market structure. The value of tokenized real-world assets is projected to reach $14 (Dh51.4) trillion by 2030 and $55 (Dh201.9) trillion by 2035, creating new channels for distribution, ownership, and product design.
These developments could alter how assets are accessed, transferred, and managed, potentially weakening traditional advantages tied to scale and distribution while enabling new entrants to compete.
Lukasz Rey, Managing Director & Partner and Middle East Head of Financial Institutions at BCG, said that the region’s asset management industry is at an “inflection point”, which he said demands a fundamentally different approach to competition.
“While near-term dynamics will depend on the broader market environment, the region’s structural fundamentals remain compelling, and many asset managers continue to view the GCC as a strategic priority,” he explained.
Rey added that firms that invest in distribution capabilities and technological transformation will be best positioned to navigate uncertainty and capture the opportunities ahead.
“Middle East asset managers have an opportunity to leapfrog traditional operating models by embedding AI and digital capabilities into their core operations,” Mohammad Khan, Managing Director & Partner at the firm, said.
“While the path forward will require navigating evolving market conditions, firms that move strategically to build scalable distribution networks and technology-enabled platforms will be well positioned to shape the next era of regional asset management,” he added.
