Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
Although many fund houses have local offices to market to Middle Eastern clients, hardly any run Mena- (Middle East and North Africa) focused funds on the ground. If they offer a Mena product, itÆs usually run by an emerging-markets team in London, or they may white-label a product managed by one of the GulfÆs indigenous firms.
INGÆs move follows a new investment team in Dubai set up by Schroders, while Prudential Asset Management is planning to begin local manufacturing. Franklin Templeton is the only other global firm to claim a local investment capability, not on its own, but through its 25% stake in Dubai-based boutique Algebra Capital.
INGÆs Hong Kong office made the decision to manufacture on the ground, to match its wholesale bank and private bank in Dubai. The Gulf office, located in the Dubai International Financial Centre, is run by Grant Bailey, previously with the firmÆs Australia business.
The firm has hired Foustok, previously head of asset management at National Bank of Dubai, an investment bank. NDB merged with Emirates Bank in March 2007, creating a local powerhouse, but one with two asset-management arms. Foustok, whose background at NDB was more institutional than retail-focused, was interested in maintaining a regional or international distribution model. She and her team pitched a number of global fund houses about running Mena mandates; most of them were only interested in marketing to local clients. ING was looking for local manufacturing.
The team now includes six equity managers and two in fixed income. In December they launched a Mena equities fund, and plan to introduce a local bond product in the first quarter of this year. So far the equity team is running a segregated account on behalf of one large institutional investor from Taiwan, and ING plans to market a retail fund starting in February, with roadshows to kick off in Europe. ôWe have interest from funds of funds and emerging-market managers who arenÆt based in the Gulf,ö Foustok says.
Schroder Investment Manager set up a local investment team of three fund managers and two analysts, all ex-Shuua Capital professionals, in July. Rami Sidani is the head of the team. The firm had already launched a Mena fund in 2007, which was run by the global emerging-markets team in London, with research initially provided by Algebra Capital. When Franklin Templeton acquired its stake in Algebra, the relationship ended and Schroders decided to get its own team.
Schroders has since launched a Mena fund aimed at Asian retail investors, that includes exposure to Turkey and Israel, and is partly managed from London and partly from Dubai. Next is to create an Arabian countries fund, to be managed wholly from Dubai by Sidani and his colleagues, according to William Wells, head of retail sales for the Middle East.
Prudential Asset Management is considering the establishment of a manufacturing capability to be based in the DIFC as well, says Suraj Mishra, Singapore-based CEO. ôWe will manufacture in Dubai when market conditions improve,ö he says, noting the firm already has local compliance and operations capabilities. The firm had planned to introduce an equities capability in October, but for obvious reasons decided to hold off until markets stabilise.
AsianInvestor magazine will provide a detailed look at the funds industry in the United Arab Emirates in its February 2009 edition.
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