Large institutional investors in the Middle East are increasingly switching towards alternative investments, such as private equity and hedge funds, to generate returns in volatile global markets, according to the survey conducted by the asset management arm of French bank Natixis.
The new survey findings reveal that there has been a paradigm shift in the investment pattern among investors in the Middle East.
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These investors have preferred to invest in conservative products such as government bonds and index-replicating funds, Natixis reported.
The Gulf Arab region has the world’s largest sovereign wealth funds and family investment offices, which are major sources of revenue for global fund managers.
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By GlobalDataManaging director and regional head at Natixis Global Asset Management, Jamal Saab, said: "The study shows an acknowledgement by institutional investors that the old rules of investing no longer apply and confirms the need for new investment strategies to address the unique challenges of modern markets."
According to the survey, approximatley 69% of the polled Middle Eastern institutional investors expected to increase fund allocations to alternatives and other assets not related to the global market trends.
Sovereign funds, like the Abu Dhabi Investment Authority, prefer to invest in private equity funds as they try to balance short and long-term investment objectives.
Outlook ahead
The Natixis survey revealed that 93% percent of respondents predicted that alternative investments would perform better in 2013.
The survey results showed that 59% of Middle East investors believe that their citizens will have enough assets to address their liabilities when they retire but 84% are confident of meeting their own long-term liabilities.
A recent Natixis report also revealed that institutional investors around the globe believe they have a better handle on risk, but most worry about the challenges of rising volatility, inflation and low yields.
