Where are UAE residents parking their savings and why

UAE residents are becoming more particular about where they park their savings. Gone are the days when their ultimate goal was to buy a house. While real estate continues to top the charts in big-ticket investments, a growing number of investors are looking at spreading their money across global equities, gold, fixed income and digital assets.

Gulf News spoke with financial advisors and brokers tracking investor activity in the country to get a sense of which products are topping the list and why.

AI & Tech Stocks: Artificial intelligence has emerged as the defining investment theme of the year. At Sarwa, an online trading platform, AI-related trades account for around a quarter of all activity on the platform. “Investors look beyond the headline names to the chips, memory, and data centers powering the AI buildout”, said Faisal Abdulshakour, Wealth Advisor at Sarwa. They’ve seen this shift particularly since April this year.

Century Financial, another UAE based financial services and brokerage firm, has seen a similar pattern. Chief Investment Officer Vijay Valecha says semiconductor exposure has stood out. “As the Nasdaq keeps hitting fresh highs through the year, chipmakers, data centres and automation-related companies are being sought after.” He also notes that the easier way to get exposure to these themes, are through ETFs like QQQ, SOXX among others.

ETFs: Exchange-traded funds remain the preferred vehicle for accessing a variety of themes. Valecha said S&P 500, Nasdaq-100 and semiconductor-focused ETFs, such as SPY, QQQ and SOXX, dominate client portfolios. SPY, the oldest US-listed ETF, remains the most heavily traded product in the market with around $806 billion in assets. SOXX, dedicated to AI infrastructure chipmakers including Nvidia, AMD and Micron, has returned roughly 85% year-to-date.

At Sarwa, S&P 500 ETFs, including Sharia-compliant options, remain popular for broad exposure to the US market, Abdulshakour said, and major IPOs have also drawn heavy trading, with SpaceX becoming the platform's most widely traded asset following its June listing.

Gold: Continues to hold its place as a core hedge against inflation, fiat currency depreciation and geopolitical risk. Prices swung sharply this year, climbing to a record $5,589 an ounce before falling below $4,000 and recovering to around $4,300. In the UAE, 24-karat gold has become relatively cheaper since earlier this month. Its currently trading at Dh517. 22-karat is being priced at Dh478.75, whereas 18-karat gold is trading at Dh 393.50.

18-karat below Dh400 has become a good selling point for most jewelers in the UAE. Madhur Kakkar, Founder and CEO of Elevate Financial Services, said investors should treat gold as a diversifier within a broader portfolio. "A measured allocation [to gold] can help investors navigate periods of geopolitical uncertainty and market volatility," he said.

Fixed income and Sukuk: Higher interest rates have made income-generating assets more attractive this year. Kakkar pointed to short-dated fixed income and money market funds as a way for investors to earn a meaningful return on the cash portion of their portfolio while retaining liquidity.

UAE sovereign Sukuk, including retail T-Sukuk, is also drawing growing interest, offering an AED-denominated, government-backed and Sharia-compliant option for residents with local financial commitments. Interest in the instrument is likely to build further after the second tranche of retail T-Sukuk was priced at 5.06%, higher than the previous issuance, giving investors a stronger income incentive to lock into dirham-denominated government debt.

For UAE residents whose expenses are largely in dirhams, the combination of a rising yield, sovereign backing makes it an increasingly attractive alternative to lower-yielding bank deposits.

Crypto and Bitcoin: For the more high risk-appetite investors, digital assets have carved out a big chuck in their mainstream portfolios. Bitcoin exposure via ETFs such as IBIT has grown steadily, with the fund now holding roughly 60% of all US spot Bitcoin ETF assets, part of a broader $102.5 billion market, Valecha said, signaling rising institutional acceptance of the asset class.

Sarwa's Abdulshakour noted crypto continues to attract buyers on its platform, even as activity has slowed somewhat in recent months.

There is no one-size-fits-all approach, Kakkar adds. "A sensible allocation should combine liquidity for short-term needs, fixed income for stability and income, global equities for long-term growth, and selective diversifiers such as gold or real estate." The right mix, he added, ultimately comes down to an investor's goals, timeframe and appetite for risk.