Dubai: Permal, a global player in alternate investment management with $23 billion (Dh84.4 billion) worth of assets under management, is seeing growing Middle East interest in hedge fund investments.
Local investors' portfolios are still dominated by regional equities and bonds, but they are now looking to spread risk across asset classes, seeking longer-term returns and greater downside protection. International investments and absolute return funds have been beneficiaries.
"Investors from here, particularly high net-worth individuals, institutional investors and sovereign wealth funds, are showing growing interest in alternate investment strategies. Currently about 20 per cent of our total assets are from the Middle East region," said Isaac R. Souede, chairman and chief executive of Permal Group.
The company is bullish about prospects despite a tough capital-raising environment and turbulent times for global markets and hedge fund industry. Last year the company's total assets under management increased by $1 billion.
"Despite the tough market conditions we have seen positive net inflows [of assets under management] for the last three years. Even at the end of the first half of the year we were in positive territory," Souede said.
In the post-crisis era that is characterised by high market volatility, low inflation and low interest rates, Permal sees growing investor interest from the region in hedge fund investing
"Investors everywhere want to minimise the impact volatility on their investments. In absolute return strategies, we have consistently proved that we can generate 600 to 700 basis points above the treasury yields. In the current market environment it works to anything between 6 to 7 per cent return on investment on an annualised basis," Souede said.
Secure market
For the medium term, he expects macroeconomic factors to dominate investor sentiment across the world rather than stand-alone corporate fundamentals. Permal sees the UAE as a secure market, with few of the difficulties faced by European sovereigns and financial firms.
"This is a very different situation from three years ago. In general, caution has paid off and central banks are seen as prudent. The UAE has improving fundamentals and attractive valuations as geopolitical concerns fade into the background," Souede said.
