The Middle East’s Fund Industry Is Moving From Capital to Capability

By Deniz Omer, Regional Director, Middle East & Africa, Multifonds

The Middle East fund industry is moving from being viewed primarily as a source of capital toward building the operational capability to manage, administer and service more assets locally. Across the Gulf, growing fund ecosystems, stronger regulatory frameworks and broader product ambitions are increasing the need for scalable fund administration, asset servicing, data, reporting and control.

In this article, Deniz Omer, Regional Director, Middle East & Africa at Multifonds, explains why the region’s next phase of growth will be defined less by market entry and more by the ability to scale with resilience, operational depth and local market understanding.

Key Takeaways

• The Middle East is increasingly building the institutional and operating infrastructure required to manage and service investment funds closer to the region.

• Growth in private markets, ETFs, Islamic finance, cross-border structures and digitally enabled products is creating new requirements across accounting, transfer agency, investor servicing, reporting and control.

• As firms expand across products and jurisdictions, operating models need consistent data foundations and scalable workflows rather than parallel processes and manual workarounds.

• AI can support exception management, data analysis, reporting and operational decision-making, but its effectiveness depends on reliable data, governance and controls.

• Long-term success will require a combination of global operating standards, resilient technology and practical understanding of local regulation, investors and market structures.

How is the Middle East fund industry maturing?

The Middle East fund industry is maturing as more capital is not only raised in the region, but also structured, managed, administered and serviced there. Across the Gulf’s major financial centres, institutional depth, regulatory frameworks and operating infrastructure are developing alongside asset growth.

The evidence is visible. Saudi Arabia’s asset management industry surpassed SAR1 trillion in AUM at the end of 2024, while the number of investment funds reached 1,549. ADGM reported 36% AUM growth in 2025, with 171 asset and fund managers managing 244 funds. QFC recorded a 19% year-on-year increase in AUM among regulated firms in the first half of 2025. Together, these figures point to more capital being allocated, structured and managed closer to the region.[1][2][3]

The significance of this shift is operational as much as commercial. As more funds are launched, administered and serviced locally, fund infrastructure becomes a more visible source of competitive advantage. Capabilities that once sat behind the scenes are increasingly central to how firms scale and differentiate.

Why is Middle East market entry becoming a question of long-term capability?

For international firms, a light regional footprint may once have been sufficient: a representative office, a distribution strategy and a relationship-led model. That is changing as investors become more sophisticated, regulators strengthen frameworks and local institutions develop broader ambitions.

The question is no longer only, “Should we be in the Middle East?” It is increasingly, “How do we build here in a way that can last?” Some institutions are bringing capabilities in-house to gain greater oversight across their NAV books, while others are expanding services across a wider regional base. International firms bring global experience; domestic firms bring deeper knowledge of local regulation and investor behaviour. Durable growth increasingly depends on combining both.

Why is product growth becoming an infrastructure question?

The next phase of Middle East fund growth will not be driven by traditional funds alone. Private markets, alternatives, ETFs, Islamic finance, cross-border structures and digitally enabled products are becoming more relevant, and each has different operational requirements. Private markets involve capital calls, commitments, valuations and investor communications. ETFs depend on timely data, basket management and control over the creation and redemption lifecycle. Islamic finance brings specific structuring and governance considerations.

Product innovation therefore becomes an infrastructure question. A new fund structure is not only a front-office opportunity; it affects fund accounting, investor servicing, transfer agency, reporting, compliance, data management and operational control. Early growth can often be supported by people, spreadsheets and localised processes. Sustained growth requires a more deliberate and scalable operating architecture.

How does growth test fund operating models in the Middle East?

The challenge for firms in the Middle East is not only higher volume; it is continuous change. A manager may begin with familiar asset classes and then expand into private credit, real assets, Shariah-compliant strategies or ETFs. A local institution may start by servicing its own assets and then support third-party mandates. An international firm may enter through one Gulf financial centre and later extend across the region.

Each step adds data sources, valuation points, workflows, reporting cycles and oversight expectations. The strategic question is whether the operating model can absorb that change without losing control. Firms need to ask whether new structures can be supported without creating parallel processes, whether accounting, investor servicing and reporting can draw from a consistent data foundation, and whether teams can maintain transparency as activity becomes more complex.

These questions are particularly important in a fast-developing region. The Middle East is not simply scaling an established fund industry; in many areas, it is still shaping the operating architecture that will support its next phase of growth.

What role should technology and AI play in Middle East fund operations?

Technology should help fund administrators and asset servicers scale while preserving operational resilience. Its value should not be measured only by the amount of automation it delivers, but by whether it improves consistency, transparency and oversight across increasingly complex activity. Stronger data architecture can also provide a clearer view across products, portfolios, investors and jurisdictions.

AI is likely to become more relevant in areas such as exception management, data analysis, reporting support and operational decision-making. But AI is only as useful as the foundations beneath it. Without reliable data, clear governance and robust controls, firms will struggle to apply AI consistently or meaningfully in core fund operations.

The objective should be to free expertise rather than replace it. If experienced teams spend less time handling manual exceptions and navigating disconnected systems, they can spend more time on oversight, client service, risk judgement and higher-value decision-making.

Why do global standards and local market knowledge both matter?

The Middle East’s next stage of fund industry growth will require a careful balance between global operating standards and local understanding. Regulation, investor expectations, product preferences and relationship models differ across the region, even as expectations around governance, transparency, reporting and operational control become more international.

Technology partners therefore need to bring more than systems. They need domain knowledge, implementation experience and the ability to adapt global operating models to regional realities. Multifonds’ experience with global asset servicers across multiple jurisdictions, fund types and operating models provides a broad view of the operational patterns that emerge as markets mature. In the Middle East, the value lies in applying that experience with sensitivity to local regulation, investor expectations and market structure.

What will define the next phase of Middle East fund industry growth?

Execution will define the next phase: whether the region can turn market momentum into durable operating models that support growth across products, jurisdictions and investor segments. Firms that combine operational depth, resilient technology, scalable data and workflows, and practical market understanding will be best positioned to shape the Middle East fund industry as it moves from capital to capability.