Invest AD hopes to attract investors in Europe

Invest AD has sought to register and domicile its GCC and Africa funds in Luxembourg, which will allow the fund manager to freely market and sell both investment vehicles across Europe.

Invest AD, the investment company backed by the Abu Dhabi Government, is seeking a wider investor base for its funds.

It has sought to register and domicile its GCC and Africa funds in Luxembourg, which will allow the fund manager to freely market and sell both investment vehicles across Europe.

The funds are now a part of the Undertakings for the Collective Investment of Transferable Securities (Ucits), a regulatory framework that allows investment funds to be sold across borders in the European Union and offers additional investor protection measures.

"We chose to go down that path because there are a number of asset management businesses that have products that invest in the region, but the vast majority of them have been established and regulated in jurisdictions that you would not be able to sell to investors in Europe or Asia because they don't meet certain standards," said Mohammed Salih Al Hashemi, the executive director at Invest AD Asset Management.

The Ucits funds have €5.6 trillion (Dh24.89 trillion) of assets under management, accounting for more than two thirds of investment funds across Europe.

"Ucits has become more appealing to international investors and there is a certain level of diversification and safeguards in place," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi, whose UAE exchange-traded fund is regulated by Ucits.

New regulations to govern the fund management industry in the UAE - drafted by the market regulator Securities and Commodities Authority and industry professionals during the past two years - are yet to be enacted by the Ministry of Justice.

The Dubai Financial Market General Index has lost more than 70 per cent of its value since the onset of the global financial crisis, while the Abu Dhabi Securities Exchange General Index has lost about 50 per cent in the same period.

"Investors have become more conscious of where they should put their money because of the way they were serviced by fund managers in the recent past," Mr Al Hashemi said. "They would go the distance to communicate to get business, but as soon as they got the business they stopped, and [after] the financial crisis they tended to ignore them because in some cases they had no explanation for their performance."

Many asset managements have been forced to restructure or shut their businesses.

"A number of companies out there have stopped focusing on their own businesses because they were going through their own turmoil and focusing on how they can sustain their business," Mr Al Hashemi said.

"In the last two to three years, the number of asset management houses, some of which could be considered household names, in few cases have effectively shut down or absorbed into their larger group."

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