Firm expects share of Gulf Arab investors to increase by half in few years
Investcorp Bank, the Bahrain based alternative investment firm, expects the share of Gulf Arab investors in its hedge funds to rise to about half in a few years from about 30 percent now as they seek bigger returns.
“There is a lot of interest from the Middle East” in hedge funds as they have provided better returns than equity markets and with lower volatility, Deepak Gurnani, Investcorp’s head of hedge funds and chief investment officer, said in an interview in Dubai today.
Middle East funds are likely to boost allocations to hedge funds over the next six to nine months, he said.
Gurnani said, investcorp’s funds of hedge funds business manages $4.7 billion, including $1 billion of its own money. He said, about 70 percent of the investors in its hedge funds are US institutions.
Investcorp posted a profit of $102.2 million in the fiscal year through June, compared with a loss in the preceding year as income from hedge fund investments rebounded and the decline in value of its private equity assets halted.
The company, which invests in private equity, funds of hedge funds and real estate, had $9.7 billion of assets under management at the end of June, up from $8.8 billion a year earlier.
Gurnani said, investors’ allocations to hedge funds may vary from 5 percent to 40 percent of their portfolios, although it is lower for Middle Eastern funds than those in the US. He said, investments by Middle East funds in hedge funds will consequently rise at a faster pace.