Abu Dhabi: Mutual fund assets in the Gulf rose 9 per cent or $2.3 billion (Dh8.45 billion) in the first half of last year, according to a study released yesterday.

The global mutual fund industry regained some lost ground in 2010 and the Gulf Cooperation Council countries (GCC) witnessed a flurry of new funds, according to the GCC Mutual Fund Industry Survey 2010.

The study noted that according to the Investment Company Institute, global mutual fund assets at the end of June last year stood at $21.4 trillion, a jump of 5.4 per cent from a year earlier. Assets under management, however, were still 18 per cent lower than the peak of $26.15 trillion at the end of 2007.

The survey was sponsored by the Abu Dhabi Council for Economic Development, Qatar Financial Centre Authority, PricewaterhouseCoopers, Dow Jones Indexes and Emirates NBD.

"The purpose of this study and its release is to provide greater information about the market to investors, policymakers, journalists and analysts," said Michael H. Tomalin, NBAD group chief executive.

According to the study, Saudi Arabia was the largest mutual fund industry in the region. Fund managers in the GCC control an estimated half of global Sharia-compliant fund assets.

Risk aversion

Fund managers located in Saudi Arabia in particular dominate the Sharia-compliant fund segment. While the position of the UAE ranks higher as an asset management centre in the GCC, it ranks lower as a fund management centre.

Equity funds in the GCC saw net outflows in the January 29-June 20 period for which data were available. Fixed income funds also witnessed outflows against the background of flows and ebbs of regional debt restructuring news. The only category to witness inflows was Islamic money market funds reflecting risk aversion.

The only country in the GCC that saw any meaningful increase in net new cash flow into funds was Saudi Arabia.

In Saudi Arabia, there were 340,515 subscribers (about 1.4 per cent of the population, down from 2.5 per cent of the population in 2005) in 241 funds at the end of the second quarter last year, according to data from the Saudi Arabian Monetary Agency (Sama). The number of subscribers was down by 8,959 or 2.6 per cent quarter-on-quarter and down by 28,730 or 7.8 per cent year-on-year.

The number of mutual fund subscribers fell by 15,816 in the first six months of 2010. Fund assets stood at $26.4 billion, up 11.7 per cent year-on-year at the end of the second quarter. Fund assets were up 10.5 per cent from end-2009 to the end of the second quarter of 2010.

Mutual funds domiciled in Kuwait saw net outflows of $603 million in the January 29-June 20 period. Overall assets of mutual funds domiciled in Bahrain were roughly unchanged during the period.

Commenting on the purpose of the study, Giyas Gökkent, Group Chief Economist at NBAD and author of the survey, said: "Policymakers in a number of GCC member states have identified asset management as a focus sector in the development of their economies.

"The survey provides a description of the ‘visible universe' of the GCC mutual fund industry within the constraint of data availability for the sector and it is intended to act as a seed to generate interest and bring together various entities that have a stake in the industry with a view to the formation of a fund association."