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Sharia investing picking up momentum in Gulf – Regional SWFs diversifying savings: Aka

business1KUWAIT: Sharia investing is again picking up momentum in the Gulf after almost five years of shrinking investor interest, said Jahangir Aka, head of SEI Middle East, pointing out that sharia-compliant banking continues to maintain strong growth in the Middle East.

Speaking with the Kuwait Times in an interview, Aka spoke on a range of topics pertaining to sovereign wealth funds, pension funds and wealth management organizations in the region.

In the Middle East, SEI works with sovereign wealth funds, pension funds, endowments and foundations, family offices and wealth management organizations covering investment management and administration services. SEI's Institutional Group is one of the first and largest global providers of outsourced fiduciary management investment services.

Talking about the sovereign wealth fund, Aka said," The SWFs in the region continue to maintain a very focused and disciplined approach to diversifying the "savings" of the country to ensure returns over the long-term. They have departments that are opportunistic in taking advantage of market dislocations and unique opportunities, but again that is part of a pre-approved budget and asset allocation," he pointed out.

"Regional growth will continue to drive strong growth in banking and financial services, especially given the huge infrastructure investments that governments around the GCC are making," Aka said.

SEI manages or administers $507 billion in mutual fund and pooled or separately managed assets, including $204 billion in assets under management and $303 billion in client assets under administration.

When asked about his view of the fast-changing trends in investment and fund processing market in the region, Aka said, "Actually I don't believe that the changes in the Middle East region are that fast or that distinct. Wealthy families and institutions have been integrated into the global economy for a long time and their knowledge and requirements are dealt by global firms offering their services from regional and global offices. The Middle East wealth management market remains sophisticated and competitive as a result," Aka remarked.

The results of a recent annual poll published by SEI titled "Employment Trends and Managing End of Service Benefits (EoSB) in the Middle East," revealed the building of a positive employment momentum in the Middle East region. This has consequently put increased pressure on companies on End of Service Benefit (EoSB) liabilities. Commenting on the poll, Aka said 75 percent of respondents with employees in Kuwait are large companies, defined as those with over 1,000 employees. The sectors that dominated the responses in Kuwait are insurance, oil & gas and conglomerates. 100 percent of respondent companies in Kuwait are expecting headcount to grow over the next three years. The results also show that there is a very strong confidence in economic development," he said.

According to the poll, 75 percent of companies in Kuwait account for EoSB on their balance-sheet, however 63 percent co-mingle the assets with their working capital. 50 percent want a more proactive approach to EoSB and over 62 percent would be happy to outsource the management of the whole scheme to a third party like SEI, he said, giving an overview of the emerging trends in the Middle East employment market with special focus on Kuwait.

The employment trends revealed in the poll have meaningful implications for the EoSB sector, Aka said. "Fiduciary management can enhance EoSB governance by allowing employers to assign discretion, according to their comfort levels, for investment responsibilities such as manager selection, to a single, accountable provider," he mentioned.

"This allows employers to spend more time focusing on the important strategic issues and provides a framework for reacting nimbly to fast-moving market conditions. This governance structure, together with Fiduciary Management's typically heavy focus on the progression and monitoring of the funding level, as opposed to just asset growth, offers the potential to assist EoSB schemes in achieving their long-term funding goals," he said.

A fiduciary manager can be responsible for providing risk management, investment advice, implementation and oversight of the fund's investments. The model is particularly attractive for employers who are resource-constrained and want greater strategic control of their schemes. Head of SEI Investments (Middle East), Jahangir Aka joined the SEI team in February 2006, and moved to the Middle East in 2007 to open the SEI regional office in Dubai, where he holds the position of Managing Director.

Jahangir established SEI's office in the DIFC in February 2008. The company began offering these services in 1992 and today acts as a fiduciary manager to more than 450 retirements, non-profit and healthcare clients in seven different countries. SEI launched its Fiduciary Management Services in the Middle East in 2012.

Prior to moving to the Middle East, Jahangir worked in the UK and was responsible for the sales and marketing of SEI's asset management offering, targeting strategic partnerships with private banks, wealth managers and family offices in the UK and Middle East. Before joining SEI, he spent nine years at Standard Chartered Bank, having worked in roles across Europe, Asia and the Middle East.

Jahangir is a Fellow of Wharton Business School, and involved in developing entrepreneurship in the UAE through the CERT/Wharton EPIC program. He studied mathematics and management at Kings College London.

By Sajeev K Peter

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This article was published on 26/10/2013