Bahrain Fund Industry Assets Surged In 2007

by Mary Swire, for LawAndTax-News.com, Hong Kong

08 April 2008

Assets under management by Bahrain’s mutual funds industry surged by nearly 73% to over USD15bn during 2007, according to Central Bank of Bahrain (CBB) statistics.

The number of funds registered with the CBB rose to 2,483 at the end of December 2007. The net asset value (NAV) of the registered funds totalled USD15.6bn. In comparison, the number of registered funds at the end of 2006 was 2,199, with assets under management totalling USd9bn.

“The growth during 2007 was across-the-board, in funds investing in the region, overseas and in Islamic products,” observed Mohammed Ayman Al Tajer, Director of Financial Institutions Supervision at the CBB.

Of the total fund industry assets, those held by foreign funds registered in Bahrain for sale rose 75% to USD11.1bn in 2007, compared with USD6.3bn in 2006.

The number of such funds totalled 2,360 in 2007, compared with 2,102 the previous year. The Islamic fund industry grew by 78.5% to USD1.3bn, invested through 87 funds, compared with USD750m and 80 funds in 2006.

The investible assets of Bahrain-domiciled funds rose 66% to USD4.5bn in 2007, up from USd2.7bn in 2006. The number of such funds surged by 28% to 124 in 2007, from 97 the previous year.

“The growth in funds domiciled in Bahrain, in particular, coincides with unprecedented volatility in international financial markets,” Mr Al Tajer added.

The GCC region is enjoying unprecedented levels of economic growth, and the vast majority of funds domiciled in Bahrain are invested in the region, he noted.

“The region is attracting both Arab and international investors looking for portfolio diversification and fund managers have been quick to recognize the regional investment opportunities,” continued Al Tajer.

Buoyed by strong investor demand, both conventional and Islamic investment funds are proliferating, with product offerings becoming increasingly diverse, and including equity, bonds, commodity, private equity, real estate and Ijara (leasing) funds.

In 2007, the CBB introduced a new, updated regulatory framework for the fund industry, which includes Bahrain’s first-ever rules allowing collective investment undertakings (CIUs) targeting professional investors.

The rules provide for the registration of ‘Exempt’ CIU, which allows hedge funds and other higher risk alternative investment vehicles to be legally domiciled and/or sold in Bahrain.

“The CBB is fully supportive of the fund industry and our new regulatory environment is aimed at enabling fund sponsors/managers and service providers to capitalize on the opportunities that best serve investors’ needs,” Al Tajer concluded.

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