Saudi Arabia's asset management industry demonstrated resilience during the Iran conflict, with assets under management (AUM) surpassing $340 billion in the first quarter of 2026 and projected to exceed $400 billion by 2027, according to Fitch Ratings. The rating agency attributed the sector's growth to regulatory easing, rising participation from domestic and foreign investors, and an expanding product base across mutual funds, sukuk, exchange-traded funds, and private credit. These factors helped cushion the market against geopolitical volatility while sustaining inflows.
Growth Under the Financial Sector Development Program
The growth aligns with Saudi Arabia's Financial Sector Development Program, which aims to diversify income sources, boost savings, expand investment and financing opportunities, and strengthen financial institutions, capital markets, and the fintech sector. Industry AUM exceeded $340 billion at the end of Q1 2026, up 17% year-on-year and 4% quarter-on-quarter. Fitch estimates the sector at about 26% of GDP, up from 23% a year earlier.
Saudi bank-affiliated asset managers continued to dominate the industry, accounting for roughly 60% of total revenue. “International and regional capital market institutions held a larger share of industry revenue at about 20% in the first quarter of 2026,” the agency said in its non-rating action commentary report.
Breakdown of Assets by Fund Type
Private funds remained the largest segment, representing about 54% of AUM, followed by discretionary portfolio management at 28% and public funds at 18%. Private fund assets grew 26% year-on-year and 6% quarter-on-quarter, with allocations concentrated mainly in real estate (54%) and equities (30%). Assets under discretionary portfolio management declined 0.4% year-on-year and 0.5% quarter-on-quarter, with most assets concentrated in local equities. Public funds’ AUM increased 20% year-on-year and 5% quarter-on-quarter, primarily driven by money market funds, while the remainder was allocated across equities, debt instruments, real estate investment trusts, and other assets.
Regulatory Reforms and Islamic Funds
Fitch noted that government-led reforms are expected to support the expansion of Islamic funds as the Capital Market Authority advances measures to improve the efficiency of securities activities. Proposed amendments include a 60% reduction in the minimum capital requirement for custody services, alongside broader efforts to deepen market accessibility, including opening capital markets to foreign investors. “It also approved the establishment of simplified investment funds and the regulation of robo-advisory services. Investment options are increasing with new IPOs and listings, sukuk and bonds, ETFs and private credit funds, among others,” the report stated.
The Public Investment Fund has also signed additional memorandums of understanding with global asset managers, further strengthening institutional participation and fund anchoring in the market.
Geopolitical Factors and Foreign Investment
Fitch noted that a recent US-Iran agreement could help improve conditions in capital markets by easing some geopolitical, credit, and broader market risks. However, it cautioned that the deal remains uncertain, with the possibility of delays, non-implementation, or a return to heightened instability.
Foreign investor participation showed a mixed pattern across Saudi capital markets. In equities, foreign investors accounted for about 44% of total buys and 37% of total sells on the Saudi Exchange in the week ending June 11, up from 34% and 30%, respectively, in late December. However, overall foreign ownership remained broadly stable at 12.6% of free float. In contrast, foreign participation in government debt declined to about 8% in Q1 2026, down from 12% in 2025, as sentiment softened following the start of the conflict.
“JP Morgan announced that Saudi Arabia will be added to its Government Bond Index – Emerging Markets in 2027, which could support debt capital market liquidity, diversification and resilience,” the report added.
Equity Market and Sukuk Highlights
On Tadawul, equity market capitalization rose 7% year-on-year at the end of May, despite volatility linked to the Iran conflict. The agency noted that more than 97% of mutual funds listed on the Saudi Exchange were Shariah-compliant as of mid-June. “Saudi entities remain large sukuk issuers globally; sukuk represented over 60% of Saudi Arabia’s debt capital market outstanding at end-May 2026,” the report said. Nearly all Fitch-rated sukuk outstanding in Saudi Arabia were investment grade at the end of Q1 2026, up from 97% at the end of 2025. More than 90% were in the “A” rating category, while over 98% of issuers maintained stable outlooks.
Risks and Outlook
The report concluded that the industry remains exposed to risks including oil price volatility, interest rate fluctuations, geopolitical instability, and broader market risk.
