By Courtney Trenwith
Region also taking more investment risks than rest of the world, global survey finds
Middle East residents are the most concerned in the world about the value of their inheritance, a wide ranging global survey of investors has revealed.
About two-fifths of those surveyed in the region worry about inheriting less wealth – almost double the global average.
“Culturally, there is still that element of inheriting money being... one source of your future wealth, particularly in the GCC,” said Moad Touhami, head of Middle East distribution at Natixis Global Asset Management, which conducted the survey.
“It’s not unique to the Middle East but it’s certainly higher in this region.”
The survey canvassed respondents’ opinions about the investment environment, their own investments and their retirement intentions.
About 6 percent of people in the Middle East said they would rely on inheritance to fund their retirement, higher than those in Europe and Latin America, where it was 4-5 percent.
A significant proportion (21 percent) said they would rely on their children for support.
Touhami said there was a rapidly growing idea in the Middle East that investments would be great enough to fund retirement.
“What’s surprising is that 24 percent of [Middle Eastern] investors believe [retirement funds] will come from savings and investments. It’s quite a new phenomenon over the last 10-15 years,” he said.
“Whereas in Europe, investors believe that only 15 percent of their retirement funding will come from their savings and investments.
“So there is, in a sense, a better understanding that one needs to save and invest more in order to try and fund their retirement in the Middle East than there is in Europe right now.
“There has been a traditional reliance by European citizens on the state. Middle Eastern investors say 7 percent [of their retirement funds will come from the state] and Europeans say 27 percent, which is almost ironic when... the Gulf government finances are in a better state than many European states finances are.”
The survey also found Middle Eastern investors were presently the greatest risk takers, with 57 percent willing to add more risk to their portfolio, the highest in the world.
Nearly three-quarters (74 percent) said asset growth was increasingly a priority over simply protecting principal – well above the global average of 67 percent.
“Investors now accept portfolio stability as being not critical – they have grown to realise markets move around,” the report says.
“But this doesn’t mean that they appreciate or enjoy the ride along the way. There is a desire to increase the diversity of their investments, and a willingness to sacrifice stability for the pursuit of growth, but they are hampered by their lack of knowledge about how to go about achieving these aims.”
Middle Eastern investors were more positive than other regions when reporting how their portfolios had performed in the past 12 months, and they, as well as US investors, had the highest expectations for the next year.
“Middle East investors have been, over the last decade or so, more likely to invest in alternatives, local fixed income, real estate, private equity [etc]. They’ve been far more active in the alternative space,” Touhami said.
“Their confidence for the next 12 months is often a natural by product of what happened in the last 12 months.
“If you look at the last 12 months, particularly the last six months, [in the Middle East] the equity market has done very well, real estate locally had done very, very well, local fixed income performed very, very strongly as well.
“If they’re using this to form their expectations over the next 12 months it can only be very positive.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.