Saudi asset management industry set to surpass $300 billion amid rapid growth

Saudi Arabia’s asset management industry is expected to surpass $300 billion in the coming years, fueled by regulatory reforms, the expansion of equity and debt capital markets, and a growing demand from high-net-worth individuals, according to Fitch Ratings.

The sector is poised for further growth in the second half of this year and into 2025, following a 13.5% year-on-year increase in assets under management (AUM), which reached over $250 billion by the end of the first half of 2024.

Saudi Arabia currently has the largest asset management sector in the GCC, the fifth-largest in the Organization of Islamic Cooperation (OIC), and the second-largest market for public Islamic funds globally.

As the industry evolves, it could attract funds that were previously managed offshore. Bashar Al Natoor, Global Head of Islamic Finance at Fitch, noted that Saudi AUM is projected to exceed $300 billion within a few years, driven by Vision 2030's Financial Sector Development Program.

About 95% of mutual funds are Sharia-compliant, with AUM representing 22% of the country's GDP in 2023. Private funds, which have tripled in size since 2020, now hold the majority of assets in equities and real estate.

Competition is increasing as international managers enter the market, including BlackRock's recent partnership with the Public Investment Fund to launch a Riyadh-based multi-asset platform.

Meanwhile, Saudi bank-affiliated managers control 63% of the industry's revenues, though the government's strategy continues to draw international players.

Despite the industry's strong performance, it remains vulnerable to fluctuations in oil prices and interest rates.