US fund manager Russell Investments expects to grow its business in the Gulf by 50 percent in 2011 by targeting the region's sophisticated investors such as sovereign wealth funds and pension firms.
Russell advises on or manages Gulf-based funds of about $2 billion - a total which has dropped from a peak of between $6 billion and $7 billion due to redemptions but which is set to rebound, a top executive said.
"We expect to grow 50 percent this year," Pascal Duval, executive managing director, EMEA at Russell Investments said in a telephone interview. "It's optimistic but its realistic as well."
Russell, which has assets under management of about $155 billion globally, also expects to launch Gulf-oriented exchange-traded funds (ETFs) and other index funds during the year to cater to global institutional investors.
ETFs have not so far taken off in the Gulf despite several launches last year in Saudi Arabia and UAE. Investor interest has been muted amid low liquidity and high trading costs.
"Its a shame when you look at the asset allocations of global investors towards the region. We want to offer better products that cater to them," Duval said.
Multi-manager funds like Russell research asset managers and award segregated mandates. If the manager underperforms, the multi-manager can terminate the contract and allocate the assets to a new manager.
Duval said sovereign wealth funds and other long-term investors in the region were increasingly interested in ways of diversifying their investment portfolios and looking at passive investment products or index-replicating strategies to maximise returns.
Russell expects to open an office in Dubai by the end of the first quarter and is also planning an office in the Saudi Arabian capital Riyadh.
Last year, Russell said it was eyeing more investment opportunities to tap into the economic growth of the Middle East region.
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