Investors miss out over lack of demand

A lack of appetite for regional funds has forced the family conglomerate Majid Al Futtaim Group to close the door to new investors at MAF Asset Management. MAF Asset Management, a company regulated by the Dubai Financial Services Authority, was launched in October 2008 to take over the in-house asset and fund management responsibilities from another group subsidiary, Majid Al Futtaim Trust.

But the launch of MAF Asset Management coincided with the global financial crisis, which hit regional economies and shook investor confidence. "A decision has been taken to discontinue offering third-party asset management services to new investors. The investment management team continues to be dedicated to the professional management of Majid Al Futtaim Trust as part of the family office," Majid Al Futtaim Group said.

Investors' money was being returned to them. "The decision to focus the investment team on Majid Al Futtaim Trust reflects that asset management for third parties is not strategic to the group's core businesses," the company added. Majid Al Futtaim Group's interests include property investments, retail, hospitality and leisure. It owns and operates shopping malls and represents major brands such as the car maker Toyota, the hypermarket Carrefour, the cinema chain CineStar, and the clothing chains Mexx and Jane Norman.

The group is retaining the team of asset managers that launched the company's flagship vehicle for investing in regional equities. In April last year, MAF Asset Management launched its investment fund, seeding it with US$150 million (Dh550.9m). The company was aiming to raise between $1.5 billion and $2bn but fell considerably short. According to Zawya.com data, the fund had $183.6m worth of assets under management as of May 19.

A second open-ended fund launched in July last year had only $315,514, Zawya data show. Tougher market conditions have made it difficult for asset mangers to attract regional and international investments for fixed-income and equities-focused vehicles in the Middle East. "Last year generally was a struggle for assets managers across the region. Main challenge was obviously getting international liquidity for the MENA funds," said Fadi al Said, a senior fund manager at ING Investment Management in Dubai.

"In fact we have seen more outflow of funds from the region than the inflow. There were a lot of redemptions," Mr al Said said. This did not cast doubts on the long-term prospects of the region's asset management market, and some funds had performed well despite adverse market conditions, he said. @Email:[e-mail]