RIYADH: Saudi Arabia’s asset management industry is expected to surpass $400 billion in 2027, supported by expanding capital markets, regulatory reforms and growing foreign participation, according to Fitch Ratings.
The Kingdom’s asset management sector, the largest in the Gulf Cooperation Council, has remained resilient despite global market volatility, Fitch said, with assets under management rising 20 percent year on year to approximately $370 billion in the first half of 2026.
The industry’s assets represented about 27 percent of Saudi Arabia’s gross domestic product, compared with 23 percent a year earlier, reflecting the sector’s expanding role in the Kingdom’s financial system.
“Growth is likely to continue, supported by stronger investor demand, regulatory progress and rising foreign participation,” Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said in the report.
Growth drivers
Speaking separately to Arab News, Al-Natoor highlighted the structural factors underpinning the industry’s expansion.
“Saudi Arabia has the key building blocks for a resilient asset-management industry: deep pools of investable capital, increasingly developing capital markets, a broadening investment universe and an evolving regulatory framework,” he told Arab News.
Al-Natoor said assets under management are expected to cross $400 billion in 2027, supported by deeper capital markets, regulatory modernization and rising foreign participation.
He cautioned that geopolitical instability, oil-price movements and interest-rate volatility remain key risks.
Private funds accounted for 55 percent of total assets under management after expanding 31 percent, driven primarily by real estate and equity investments, with family offices playing a significant role.
Discretionary portfolio management represented 27 percent of industry assets, while public funds accounted for the remaining 18 percent following annual growth of 19 percent.
The forecast follows continued expansion in Saudi Arabia’s investment fund sector, where assets reached SR1 trillion ($265.7 billion) at the end of June, up 28.2 percent year on year, according to figures previously reported by Arab News.
The number of investment funds also increased 29.6 percent to 2,249.
Foreign participation
Fitch reported that international and regional capital market institutions increased their share of industry revenues to 18.5 percent in the second quarter of 2026, compared with 12.5 percent two years earlier.
Foreign ownership of the Saudi Exchange’s main market remained at 12 percent of free-float shares at the end of October, while foreign holdings of domestic government debt rose to 14.7 percent in the first half of 2026 from 4.5 percent at the end of 2024.
The Kingdom expanded foreign investor access in February, removing previous qualification requirements for direct investment in its main stock market.
In October, the Capital Market Authority proposed tighter investment fund disclosure requirements to strengthen transparency and investor protection.
Islamic finance
Al-Natoor told Arab News that Islamic finance remains central to the industry’s development, supported by Saudi Arabia’s predominantly Shariah-compliant fund ecosystem and substantial sukuk market.
“Islamic finance is a structural strength of the Saudi market, not a niche,” he said.
He added that international managers are gaining ground in an industry still dominated by local bank-affiliated firms.
Saif Shawqi, director of Islamic finance at Fitch Ratings, highlighted the importance of credit quality in supporting investment opportunities.
“Credit resilience also supports the growth story, as the Saudi market provides access to predominantly investment-grade sukuk and rated entities that are listed on the Saudi Exchange,” Shawqi told Arab News.
Fitch said 96 percent of the Saudi Exchange entities it rates carry investment-grade ratings, with the same proportion assigned Stable Outlooks. Almost all Saudi sukuk are also investment grade.
