Wealth Management

Asset management industry ‘set for growth’

#Bahrain’s assets management industry is set to see continued strong growth in the next five years. Central Bank of Bahrain supervisor Abdulrahman Al Baker said this positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets. Other factors include the enchanced regulation on asset management and capital markets, the growing wealth of high net worth individuals, as well as the steady economic growth in the region.

Wealth protection and succession solutions for wealth families

Dynastic planning is increasingly topical in the Middle East as founders focus more attention on ensuring that the family remains in harmony. According to Laurence Black, Regional Director at Asiaciti Trust, establishing a structure to manage family dynamics and ensure a smooth transition of assets helps minimise family conflict. As families become more global from their Middle East bases, there are more and more issues to consider. Families are looking further out in wealth transitioning as well, thinking about their personal legacies, such as philanthropic interests. Well-structured dynastic planning helps mitigate dangers that might arise due to political instability or other forms of fragmentation like foreign ownership rules. Cross-border issues are ever more prevalent as asset classes and geographical dispersion become more diverse. Trust structures and other special vehicles are ideal for protecting assets and can maintain control for the principals in their lifetimes.

Islamic legacy planning – evolution or revolution?

The typical GCC merchant family is facing many challenges to the maintenance, expansion and inter-generational transitioning of its wealth. According to Yann Mrazek, Managing Partner at M/HQ, there is some gradual increase in investment outside the region, but nearly three-quarters remains in the region. The focus remains concentrated on only three asset classes, the family’s own business, real estate, cash or deposits. While times are clearly changing and people from the GCC are spreading out further, their assets seem to become more concentrated. Moreover, the UAE economy is more open than ever before, implying greater competition for businesses. All this represents a wonderful opportunity for firms such as M/HQ. An estimated 30% of families are not thinking about estate planning, while 70% are receptive to legacy matters. For those with offshore assets, a trust or a foundation are likely to be compatible. For domestic assets, there are new tools being rolled out in the region. These include new SFO, trust and foundation regimes.

Managing wealth for a new generation

Tariq Bin Hendi, Ph.D., Executive Vice President of Emirates NBD, discussed the challenges that lie ahead for Private Banking. Bin Hendi said that approximately 200,000 ultra-high net-worth individuals are going to be passing down almost 30 trillion US dollars to their children. In addition, there will be millions of people passing down more moderate wealth, from the entrepreneurial and business fields. In the UAE, the older generation still prefer real estate and equities to the private equity and technology sectors that their children and grandchildren favor. Wealth management institutions are changing the way they interact with the new generation of clients. They need to better equip themselves with more nimble technology, from AI to Robo-advisors to ATMs, so as to not lose ground to the new startups. Bin Hendi suggests a new generation of products and services, which include a combination of human and AI interaction. Emirates NBD is spending 1 billion Dirhams over the next 3 years to bring about this technological revolution.

Wahed Invest: a Sharia-compliant #investment #robo-adviser

Robo-advisers are opening up investment advice to the masses. They can provide sound investment advice for a fraction of the cost of their human counterparts, making it affordable enough for those with as little as US$100 to invest. Junaid Wahedna has taken the robo-investment concept a step further, making it available for those looking for Sharia-compliant investment options. Wahed Invest charges far lower fees than those charged by a conventional wealth manager. The robo-advisor Betterment has accrued over $10 billion worth of assets under management in the US since its launch in 2008. Currently, all of Wahed’s clients are from the US and Mr Wahedna says it plans to start accepting international customers. The company has 50 full-time employees and it has offices in New York, London, Dubai and Mumbai. The company sees a lot of potential in India, having seen strong demand for Islamic investing in the country from its pre-registered clients.

Islamic #funds, asset management sector poised for growth

A report by Malaysia International Islamic Financial Center shows that the Islamic fund and wealth management sector is expected to grow significantly. The report notes that Malaysia and Saudi Arabia have the largest market share of the global Islamic funds and wealth management industry, together holding more than 67%. Saudi Arabia contributed a 35.6%-share of $25.2bn and 209 Islamic funds at end of the first quarter of 2017, while Malaysia has the most number of Islamic funds globally with 388 funds managing a total AuM of $22.6bn. The growth of the sector stems from the fact that global fund and asset managers increasingly notice the potential of this sector. Since it is now also accessible to institutional investors, as well as non-Muslim investors, they began using it as a new way to diversify investments. In a projection by Thomson Reuters, the global Islamic funds and asset management industry remains poised for growth and should increase in volume by more than 8% to $77bn by 2019.

Arabesque Appoints Three New Members to Board of Directors

Arabesque has appointed three new non-executive directors to the Board: Dr Carolyn Woo, former CEO of Catholic Relief Services; Professor John Ruggie, Harvard Kennedy School; and Yolanda Kakabadse, President of WWF International. They join Barbara J. Krumsiek, former CEO and President of Calvert Investments, and Georg Kell, founding Executive Director of the United Nations Global Compact, on the Board of Directors. Arabesque is an asset management firm that spun off from Barclays Bank in 2013. The firm’s approach to stock selection integrates environmental, social and governance (ESG) information with financial and momentum analysis.

Abu Dhabi Global Market launches first #foundations regime in the #UAE

Abu Dhabi Global Market (ADGM) has launched a Foundations regime in support of more effective structures for wealth preservation and wealth management. The new ADGM Foundations regime provides a strategic platform for financial planning and structuring, serving as an alternative to trusts and corporate vehicles. The platform offers a variety of services, including family succession planning, tax planning, asset protection, wealth management and corporate structuring, without relying on foreign regimes and practises. Both local and foreign entities will benefit from the ease-of-doing-business environment. The ADGM Foundations Regime creates a new type of legal structure with its own distinct attributes. It combines compliance regime with a high degree of operational autonomy to the founder and offers access to the double tax treaty network of the United Arab Emirates.

#Investors #prefer #Shariah-compliant pension #products

The private pension fund industry grew by over 32% during 2016-2017, and the total assets of the industry crossed Rs25 billion. This growth of the industry has primarily resulted from an increase in participation by general investors and better performance of the stock market.
Thereby investors preferred Shariah-compliant pension products over conventional products. Out of Rs25 billion assets of pension funds, over Rs16 rupees comprise of Shariah-compliant securities.
In 2007 private pension funds were introduced. Currently there are 19 pension funds operating in the market, out of which 10 are Shariah compliant and 9 are conventional. These funds are managed by 10 fund managers. The pension funds provide participants investment options in terms of securities and commodities.
Participants can choose retirement age between 60 to 70 years. On retirement, they can withdraw up to 50% of the accumulated balance in lump sum and the remaining 50% in installments, as pension.

Shariah compliant #Robo #Advisor ‘Algebra’ to pilot in Asia before going global

#Malaysia-based private wealth management firm Farringdon Group is all set to launch its Shariah compliant Robo Adviser 'Algebra'. A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Farrigdon Group CEO Stuart Yeoman said that Algebra can take minimum investments worth $4000 and the launch is planned for next month. Before going global, Farringdon is piloting the product in Asia frst. Algebra is backed by smart beta trading algorithms to derive its active equity portfolio and blends it with Sukuk bond funds to derive a risk weighted portfolio. The robo-advisor will follow basic Islamic principles. It has received the approval of Shariah Scholar Datuk Dr Daud Bakar of Amanie Advisors for its shariah investment strategy.

#Dubai strategy centre for #Islamic #finance close to its #goals

A strategy centre that was tasked to implement a strategy for Dubai to become a global hub for the Islamic economy can report that progress was made on about 75 % of its initiatives to this date.
The Dubai Islamic Economy Development Centre, that was set up in 2013, stated yesterday it had held a board meeting on Tuesday which was attended by Sultan Al ¬Mansouri, the Minister of Economy as well as the chairman of the centre, to discuss these achievements.
The centre identified key sectors for developing three segments of Dubai‘s Islamic economy: Islamic finance, halal products and Islamic lifestyle including culture, art, fashion and family tourism.
The minister said: "Dubai and the UAE are instrumental in raising awareness about the culture of Islamic economy worldwide and boosting global interest in adopting its principles. The Islamic economy ¬strategy adopted by Dubai and the wider UAE is truly unique in its ability to foresee economic changes, offer secure investment options and utilise bonds to finance major projects across the globe."

Alizz islamic bank launches Tharwa Wealth Management

Alizz islamic bank recently celebrated the launch of the Tharwa Wealth Management Segment. Tharwa offers an array of financial services led by a team of seasoned relationship managers. Tharwa customers benefit from a selection of exclusive privileges including access to special discounts on travel, accommodation, restaurants, entertainment and various VIP services. Furthermore, Tharwa customers can enjoy the privacy of the Tharwa lounges in conducting their banking transactions, as well as the MasterCard World Credit Card. Tharwa customers also have the flexibility to manage their money through the Izdihar sweep savings account, which adheres to the Islamic principle of unrestricted Mudarabah.

#American #Muslims Grapple With Interest-Based Borrowing

Samantha Lord-Konare converted to Islam six years ago and then she found herself in a quandary because of a student and credit card loan that her new religion prohibited. Lord-Konare vowed not to use her credit card but resolving the issue of her student loan was more challenging.
She consulted the imam who presented her with four options. She could pay off her loan in one lump sum, obtain an interest-free loan, receive the money as a gift, or do her best to pay off her student loan as quickly as she could. "Of course, I had to choose the last. I could never ask someone for that amount of money," said Lord-Konare.
Islamic scholars say there is a clear prohibition on usury in the Koran. The Shariah also stipulates that Muslims should acquire wealth in a legal and ethical manner; any element of usury, gambling or chancing is forbidden.

#Advisors help clients go from value to virtue

Faith-based advisors assist clients with financial planning, investment management, insurance, and other aspects of wealth management that their secular counterparts do. But according to Kingdom Advisors President Rob West, faith-based advisors generally help clients determine "what’s enough" for them to live on and use the rest to "serve others". One example is Ronald Blue & Co., a US$65-billion multi-branch advisory firm that incorporates religious values and laws into financial plans. While some faith-based advisory firms cater to lower-value investors, many serve relatively high-net-worth clients and charge higher than the standard 1% of assets per year. At Islam-oriented Azzad Asset Management, fees start at 1.75% to 2% of assets and decline with increasing asset values. The high fees are justified by labour-intensive services such as screening out certain stocks and calculating the zakat.

#Bahrain’s sovereign wealth fund is back on track

Mahmood Hashim Al Kooheji, the head of Bahrain’s sovereign wealth fund, Mumtalakat, is intent on brokering safe, considered deals that yield long-term growth. The wealth fund is taking an increased interest in the comparatively stable sectors of healthcare, education and industry. As evidence of this strategy, Mumtalakat last year took an undisclosed equity stake in Italian healthcare firm KOS Group. In October 2015, Mumtalakat took a majority stake in UAE-based GEMS Education as part of an investment group that included US private equity firm Blackstone. Al Kooheji expects another deal to be reached next year to launch GEMS schools in Bahrain. He also points out that Mumtalakat announced six new deals in 2016, a significant number for a small fund. According to Al Kooheji, Mumtalakat is now truly diversifed in the GCC, US, UK and Europe and this will continue in the future.

Shariah-compliant #pension schemes gaining popularity

Shariah-compliant pension funds are entering the wealth and asset management segment worldwide. One example for a state-backed Shariah-compliant pension fund is the Islamic savings scheme option introduced in Malaysia. Here $25bn of the fund’s entire assets of $160bn have been dedicated to the new Shariah-compliant investment line. According to Moody’s global head of Islamic finance, Khalid Howladar, Shariah-compliant investments now represent 15% of the fund’s entire investment, which makes it the largest standalone Islamic pension fund globally. Another country where Islamic pension funds are in growing demand is Pakistan. A number of banks, financial service providers and fund managers offer private or voluntary state-supported retirement savings schemes whose investments are made strictly in Shariah-compliant instruments. In the Western World, the UK and Australia were the first to offer Islamic pension schemes. In the Gulf Cooperation Council (GCC) countries, Islamic pension funds are yet comparably small, particularly state-backed ones.

#Zurich: #Responsible #Finance & Investment Summit 3-4 May 2017

Summit will explore intersection of #fintech, #ESG and #Islamicfinance. #RFISummit17

January 24, 2017, Zurich, Switzerland –

Bringing together a diversity of perspectives is critical for continuing the growth occurring within responsible finance. On this premise, the Responsible Finance & Investment Summit 2017 will convene in Zurich, Switzerland from 3-4 May 2017 around the theme “Building Bridges, Expanding Impact”.

Recent estimates from industry stakeholders show continued growth in responsible finance assets in many geographies and sectors. Responsible investment in Europe grew by 42% during the past 2 years, while in the U.S., assets grew by 33%. In Islamic finance, which has a global presence with a significant presence in Europe, the Middle East and Asia, growth in the last 2 years has been 21%. Identifying actionable areas for collaboration will support continued growth towards a more sustainable financial system.

Wahed Invest Inc. Launches the World's First Islamic Robo-Advisor

Wahed Invest announces the launch of Wahed, the first automated Islamic investment platform, to provide access to halal portfolio management for 2 billion Muslims around the world. The Wahed platform analyzes thousands of securities worldwide to create portfolio allocations with the highest growth potential for its clients. According to CEO Junaid Wahedna, the platform democratizes access to the best financial advice for investors. Wahed offers portfolio management for investments as little as $7,500, as opposed to the usual $500,000 minimum required by most wealth management firms. Wahed Invest is currently accessible in the United States and will be available in more than 100 countries by 2017.

Middle East's AuM declines in 2015, says BCG study

According to the annual benchmark report of the Boston Consulting Group (BCG), the global growth of asset management stalled in 2015 as the industry recorded its worst year since the 2008 financial crisis. Growth in assets under management (AuM) stalled — or in the case of the Middle East declined 10%. Flows of assets, revenue growth and revenue margins all dipped lower in 2015. AuM decreased in North America and the Middle East but rose elsewhere. Growth was modest in Europe and strong in Latin America and Asia, excluding Japan and Australia. The 10% growth of AuM in Asia, excluding Japan and Australia, was relatively robust. BCG reports that the global value of AuM rose just 1% in 2015, to $71.4 trillion from $70.5 trillion in 2014, after growing 8% that year. Asset managers will have to shift from outdated product strategies and develop disruptive investment capabilities.

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