Mena funds expect 50% growth this year: Wafra

With the returning of investor confidence, hedge funds based in the Middle East and North Africa (Mena) are eyeing as high as 50 per cent growth in their assets under management (AUM) in 2010, according to fund managers.

The expected growth in AUM, from 15 per cent last year, is mainly due to the ability of hedge funds to generate stable returns amidst economic crises and volatile market conditions, they said.

Regional hedge funds account for $30 billion (Dh110bn) in AUM, just two per cent of the global total of $1.8 trillion.

Ghazi Al Hajeri, Managing Director, Wafra, a New York based fund owned by the Kuwaiti government, told Emirates Business that "2009 was a slow year to start with. However, towards the end, fund managers increased share of the market by at least $2bn in size or about 15 per cent.

"In the region, we are expecting better growth than in 2009. The 2009 growth has resulted in bringing back the investors confidence. This year we expect at least 50 per cent growth in the assets of the local and international hedge funds. This is because we are starting from such a low base."

Local and international funds in the Mena region operate on different fundamentals and strategies, with different opportunity sets.

However, they are projected for a phenomenal growth this year.

The local funds are newer, but are fast catching up with the international ones.

Many of the local funds are establishing themselves as big players in the hedge funds arena.

This is because the investment tools that were not available in the past are now readily available with different exchanges coming up in Dubai and different instruments allow the hedge funds to trade.

Wafra has more than $9bn of assets under management and out of which more than five per cent is invested in the Middle East and North African countries. The fund will focus on Mena and emerging markets.

"Several funds that were launched here were able to reach the target size of $500 million. The region is commanding a much higher growth rate. The growth here is quite big. The size in the portfolio is growing quite rapidly. Now it is added to all the indices and all the investment benchmarks in the regions," said Al Hajeri.

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