The plan combines international investments and wealth transfer solutions via the Jersey Trust Structure through a global custodian.

Secura International’s wealth solution allows individuals, families and entities to lock in wealth while achieving financial security across a range of investment options.

The investment platform has around 300 mutual funds from more than 30 asset managers.

Individuals can also participate in model portfolio solutions which will be offered by Invesco.

Scott Boug, chairman of Secura International, said: “Many people equate offshore trusts solely for tax planning, but the reality is trusts can be used for the preservation of family wealth, succession planning, protection of assets and commercial and charitable purposes.

“We are therefore truly proud to offer a unique range of services to high-net worth clients of the bank, which combines an investment platform with wealth transfer solutions.”

In a statement on 26 February, Mashreq said the agreement made it the first bank in the UAE to offer instant and same day credit facility to so many places, including the UK, Singapore, Philippines, Australia, Canada, Bangladesh and majority of European countries.

Customer payments will be sent instantly to Europe using SEPA Instant Credit Transfer, Singapore via FAST (Fast and Secure Transfer) and United Kingdom using the Faster Payment Services. This is in addition to India and Pakistan where customers have had instant transfers since 2017.

According to the UAE Central Bank’s latest figures, the outward remittance market in the UAE is seeing significant growth with a 3% year-on-year increase from AED164.4bn in 2017, to AED169.2bn in 2018. During the first half of 2019, outward remittances from the UAE stood at AED 80.96bn.

Rohit Garg, head of business banking, FX & remittances, Mashreq Bank, said: “With this partnership, Mashreq now offers the widest network of instant/same day account credits from the UAE.”

Prajit Nanu, co-founder and chief executive, NIUM, added: “Real-time payments are becoming a big draw for banks to expand their CASA reach and we are proud to partner with Mashreq Bank as they become the first bank in Middle East to offer RTP to their customers. Cross border payments to Europe and Asia will take minutes and not days as earlier.”

The range comprises three Smartfunds – growth, balanced and cautious – and two Smartfund 80% protected funds – growth and balanced.

These risk-graded funds are run by Praemium’s in-house Smart Investment Management team.

The Smartfund 80% Protected range offers the potential growth returns of global multi-asset strategies with the benefit of 80% capital protection, the protection component being provided by Morgan Stanley.

In April, Praemium reported its third highest gross inflows on record and saw funds under administration rise 5.2% to A$7.8bn (£4.25bn, $6bn, €4.9bn) during the first quarter of 2018.

Mashreq Bank

All five registered Smartfunds will be on Mashreq Bank’s panel for distribution by advisers within its private and premier banking channels.

Mashreq has more than 50 years’ experience in banking and financial services, is listed on the Dubai Financial Market and has 44 branches in the Emirates.

Office move

Praemium also said in the announcement it had moved its Dubai office to the DIFC “for the purpose of promoting, arranging and marketing the activities of all the entities in the Praemium Group”.

Established in 2004, the DIFC is a 110-hectare district regulated by the Dubai Financial Services Authority (DFSA).

It is one of Dubai’s independent free-zones, which means it offers companies 100% ownership without the need for a local partner.

Praemium chief executive Michael Ohanessian said the fund launch and office relocation enforces the investment platform’s long-term commitment to the UAE.

“This is a significant step forward in the Gulf State markets, as we are one of the very first retail platforms to be established within the DIFC,” Ohanessian said.

Mark Sanderson, recently appointed as senior executive officer of the DIFC branch, added: “Increased regulation of the financial services sector in the UAE and wider region is driving the need for better client engagement and quality investment products.

“We firmly believe that this is the right time for Praemium to expand our presence in the UAE.”

Clever move

Commenting on Praemium’s announcement, Lafitani Sotiriou, a senior analyst at Bell Potter, said: “We see this as a clever move, capitalising on a market hungry for modern and simple to use products, accessible via an investment platform, rather than packaged life products which tend to dominate the UAE at the moment.”

Sotiriou said Praemium has already been selling its Smartfunds range in the UAE through limited means and an international partner with a market licence.

“However, with a local licence and local partner, the flows are likely to further accelerate,” Sotiriou said.

From the outset, the regime has been met by criticism, with asset managers and those distributing the products, largely the retail and private banks, arguing the onus should be on the asset manager to register the fund and pay the fee, not the distributor.

There have also been calls for the fees to be greatly reduced, as they are significantly higher than in other jurisdictions.

According to industry sources, part of the catalyst for a renewed pressure on the SCA to review the regime, is due to the fact that many organisations have begun receiving invoices from the regulator.

Nigel Sillitoe, chief executive of research company Insight Discovery, said it is “rumoured that one major bank distributor had received an invoice for US$1m (AED3.6m), while other invoices have apparently ranged between $200k and $400k”.

One person who has been a relatively outspoken critic of the regime since it was first mooted last year is Peter Duke, head of fund distribution, Middle East at Fidelity Worldwide. Duke said he understands the SCA is “considering some amendments to the fee structure, but that until a new law has been introduced, the existing rules apply”.

Duke added that he has emphasized in previous discussions with the SCA that the costs associated with fund registration are high, both compared to the size of the mutual fund market in the UAE and the fees levied in other jurisdictions.

“I believe this works against the interests of the customer as it could potentially restrict choice or increase subscription costs,” he said.

The Securities and Commodities Authority declined to comment on the issue.

Click here to read a roundtable report where HSBC Asset Management's Dan Rudd, Schroder's William Wells, Mashreq Capital's Abdul Kadir Hussain and Fideilty Worldwide's Peter Duke discuss the issue in depth

These conclusions were reached during a roundtable hosted by International Adviser, which focused on the distribution of fund products in the UAE. The event was attended by representatives from four leading asset management firms: HSBC Global Asset Management, Schroder Investment Management, Mashreq Capital and Fidelity Worldwide Investment.

In recent years, the financial services industry in the UAE has come under increased regulatory scrutiny, with the asset management sector one of those affected.

However, tightened regulations are increasing the opportunities for well-managed asset management businesses, according to the roundtable’s attendees.

A brave new world

William Wells, head of intermediary sales, Middle East at Schroders, says many asset managers stand to benefit from the new landscape.

“A lot of the asset managers, and particularly the ones who are based here, who understand the regulations and who are working with the regulators to ensure we have a well regulated environment, are going to be the ones that are going to benefit most,” says Wells.

“That is particularly from the direct distribution of funds as part of wealth management, but increasingly it will also be in terms of insurance products that are being sold through banks and through financial advisers.” 

Wells also suggests those companies with “well-structured funds” registered in globally recognised, highly regulated jurisdictions such as Luxembourg and Dublin, will be particularly welcome in the new environment.

Abdul Kadir Hussain, chief executive of Mashreq Capital, agreed, adding that one of the benefits of the regulations being introduced by organisations such as the Emirates Securities and Commodities Authority (SCA), is that it encourages consumers and, more specifically, advisers to look harder at the products they choose.

“Until now, because there’s been a lack of regulation, there’s been a lack of awareness around elements such as where the fund is housed, what transparency that allows, who are the service providers of the funds, who are the custodians, and all these kinds of things,” says Hussain.

“They fall by the wayside because advisers aren’t focusing on them and the investors obviously aren’t. Those kinds of things will become important and hence guys who are positioned and who have well-structured products should definitely benefit.”

Peter Duke, head of fund distribution, Middle East at Fidelity Worldwide, added that although there have been some “teething problems” with the new legislation from the SCA, the introduction of the rules is nonetheless a positive step for the local industry and an opportunity for advisers.

Market consolidation

One of the most significant pieces of regulation being introduced in the UAE, aside from the SCA’s fund registration rules, is due to be implemented in November. Aimed at the intermediary market, the UAE Insurance Brokerage Regulation is likely to lead to widespread consolidation in the insurance broker market due to a significant increase in the capital requirements for firms.

Views were mixed on what impact the new regulation and the following market consolidation would have, although the attendees agreed it would help improve advice in the region.

Dan Rudd, regional head MENA at HSBC Global Asset Management, says: “[The new regulations will] raise the bar of qualifications, although there is still a lot of work that needs to be done.

Quality control

“What the industry has got to get right, is to give investors comfort that when they’re getting financial advice from the industry, they’re talking to qualified, professional people. So consolidation won’t hurt us, it’s more about how [brokerage firms] bring advisers up the curve and how they communicate to the market and the client on what advice they’re giving, their qualifications and the products they’re advising on.”

Duke agreed but added that, in order for the quality of advice to improve in the UAE and for the “starting point not to be the adviser”, greater transparency and some regulation of the advice process is needed.

The attendees also discussed the benefits of having a permanent base in the country, as opposed to “tripping in” as some asset management companies do.

Duke, who joined Fidelity’s Middle East office in its fifth year in Dubai in 2005, said it is hard to quantify the benefit of having a base in the region, if one were to look purely at assets under management.

“[However], if you are close to your clients you get access, which gives you the chance to establish your credibility,” says Duke.

“Once you’ve done that, you’ve built trust and you’re in a much better position to get a percentage of every portfolio allocated to Fidelity and that is where you actually see the real benefit. Once people understand what you do and they’re confident, then you tend to pick up, incrementally, more business.”

Easier to quantify, says Duke, is the impact on companies which have had a base in the region and left.

“Their reputation is damaged, a lot of people turn against them very quickly,” says Duke. “Because having told a good story, advisers are left to rely on factsheets sent from afar or getting something from a website, which isn’t what they want.”

Wells, who opened Schroder’s office in the Middle East in 2007, having previously covered the region from the UK, also suggests the new regulations will make it more difficult for those trying to attract business without a regional presence.

“With better regulations in place, those companies that don’t have funds registered cannot distribute through banks and the like, so it’s been very important to be here, working with the regulators and our partners,” says Wells.

In recent years, there have also been a number of funds which were sold widely across the Middle East by providers without a presence, and which have since been suspended. While events like these clearly erode investor confidence in the asset management industry, it has at least driven some investors to use more established names.

A steady ship

“What it has led to is that more of the advisers are looking for stable partners to work with, stable providers and, in terms of the products, they want more liquidity and more transparency,” says Wells. “Because it’s these products that have been less liquid, that have gone to the wall and left big holes in clients’ portfolios.”

Wells added that products like Schroders’ multi-asset funds and the multi-manager range it recently acquired as part of the acquisition of Cazenove, are areas which are currently generating a lot of investor interest.

Rudd said it was a similar story at HSBC, with investors looking to its flagship multi-asset product.

“We also launched a multi-asset solution in Asia to cater for clients seeking exposure to these key markets, we brought this strategy into the region, because they’ve got different risk profiles and different clients want different types of risk,” says Rudd.

Another product area which has attracted attention, according to Hussain, are shariah-compliant products.

“We saw a need for a shariah product as we have an Islamic window in the bank that distributes into that market,” says Hussein.

“Clearly there is a lot of interest, and the thing that surprised me a little is the interest is not just regional, but global. Even global managers who may not have that product, want to look at it or want to see what the advantages are, because they see a demand base for that in the countries that they distribute in.”

Driving growth

This year has seen a number of fund management companies express an interest in opening an office in the UAE, with some having already taken positive steps in this regard.

Attracting these businesses to the region are a number of key factors, not least the reclassification of Qatar and the UAE from frontier to emerging markets by MSCI, which will come into effect this month.

Wells explains this will see “significant amounts” of money being allocated to the region by asset managers.

Meanwhile, Hussain adds that Qatar and the UAE are already being viewed by some emerging market managers as “safe haven” countries.

“We are already seeing that global EM fund managers are starting to look at this region as a safe haven within their portfolios,” says Hussain.

“So, whether it’s the Russian crisis in Ukraine, the Chinese GDP numbers, or Brazil imploding, any time you get volatility on the emerging market front, you see this region becoming more and more stable.”

Another driver for long-term growth in the region is the Expo 2020, which was awarded to Dubai in November last year, something Rudd says is a sign of more widespread positivity in the region.

“From a regional perspective, [Expo 2020] is a real sign of positive momentum for growth. The wealth management sector will have a real opportunity to play its role,” adds Rudd.

“Opportunities will still arise after 2020, especially given the event will attract over 25 million visitors, but I see the greater opportunity is now and building up to 2020. The expansion of UAE as a global business hub will no doubt continue during the next six years and into the next decade. A knock-on effect will be increasing employment and greater opportunity for financial planning.”