Middle Eastern assets under management (AuM) grew by a $100 billion from 2021 to 2022 to reach $1.3 trillion, a 7% CAGR, according to a new report from Boston Consulting Group (BCG).

However, BCG’s report “Global Asset Management 2023: The Tide Has Turned,” notes that to get back to historical levels of profitability and growth, asset managers in the Middle East need to reassess their operations.

"In fact, since 2006, 90% of revenue growth came from market performance, and in an environment where this is no longer guaranteed, it is now time for a real transformation,” said Markus Massi, Managing Director and Senior Partner, at BCG.

With central banks across the globe trying to slow growth to combat inflation, there will be an impact on equity markets.

"However, for the Middle East, the growth outlook is more positive driven by continued higher oil income and comparatively positive equity market developments,” said Massi.

To get back to historical levels, asset managers will need to cut costs by 20% overall and shift their revenue mix to generate at least 30% of their revenue from higher-margin products, BCG noted.

(Writing by Brinda Darasha; editing by Seban Scaria)