- 72% of investors in the region believe they can generate better returns through ESG investing.
- Currently, sustainable investments represent 33% of investment portfolios; investors expect this figure to rise to 52% over the next five years.
- Strong Momentum in Shariah Funding Strategies – Sukuks and Islamic loans are the two most popular Shariah-compliant asset classes in the region, with 39% and 38% interest in holding these assets, respectively.
- 67% of investors said it was important for them to adhere to Islamic investment principles in their investments, while only 4% of investors said they were not interested in Islamic investments.
Lombard Odier, a leading global wealth and asset manager with deep roots in the region and a long tradition of value investing, today unveiled the results of its Middle East survey on value investing. Key findings underscore the growing importance of value-based investing in a region where strong religious, cultural and social values remain deeply held.
When it comes to sustainable investing, 81% of high net worth regional investors said they already consider sustainability and ESG when making investment decisions. Environmental protection and decarbonization continue to be high on the political agenda in the region and investors want to play their part. Importantly, investors recognize a link between performance and ESG factors, with 72% of respondents saying they believe sustainability factors can drive superior returns.
Respondents expressed a need for more clarity and expert advice on how to invest sustainably, saying they would like to receive regular research on sustainable investing ideas (78%) and benchmarking of portfolio sustainability (77%). The results clearly indicate that financial institutions in the region need to provide more guidance to help investors express their ESG-related values. Only 29% of respondents say they are very satisfied with the service they currently receive from their banking partner and around half (58%) are somewhat satisfied.
The survey also highlighted the significant overlap between Islamic finance and sustainable finance, since both involve acting ethically and responsibly. Indeed, the overwhelming majority of wealthy investors, regardless of age, want to reflect traditional Middle Eastern values in their investments. They have already made significant progress in integrating their Islamic beliefs through Sharia-compliant strategies and plan to increase these allowances. According to the survey, 67% of wealthy investors in the Middle East say that it is important for them to adhere to Islamic investment principles. There is a strong appetite for this type of investment, with sukuks and Islamic loans being the two most popular Sharia-compliant asset classes in the region.
Private equity closely follows the categories above, with nearly a third (30%) of investors surveyed stating an interest in private equity that is consistent with Islamic finance principles. This type of asset allocation therefore remains essential for regional investors, providing a way to gain exposure to growth opportunities across a wide range of industry sectors.
The survey found Sharia-compliant investing is also important for young investors, with 54% of 18-40 year olds investing accordingly for some of their assets. This is reinforced by the greater Shariah-compliant asset allocation among the younger generation, which allocates on average 52% to Shariah investments compared to 48% for those aged 40 and over. This figure is expected to rise to 60% over the next five years for younger investors, compared to 56% for older investors.
Speaking on the reasons for the growing interest in Islamic and sustainable investments over the past 12 months, a young investor from the Middle East added:
“Being an ethical and responsible investor with Islamic values, our interest in Islamic finance and sustainable investing grew naturally. We have always avoided high-risk investments, and by aligning ourselves with Islamic finance, we continue to follow our investment strategy very well..”
Commenting on these findings, Arnaud Leclercq, Partner Holding Privé and Head of New Markets at Lombard Odier, said:
“Our survey results are very encouraging, demonstrating that affluent investors have already taken steps to integrate their Islamic beliefs through Sharia-compliant strategies and want to learn more about sustainable investing. Investors also plan to increase these allocations, illustrating a growing awareness that they can play an important role in driving positive social and environmental change. Lombard Odier is a recognized leader and has developed unique performance strategies in this area.”
You can access the full report on the Lombard Odier information page [https://www.lombardodier.com/home/private-clients/local-solutions/our-offer-in-the-middle-east/middle-east-investor-views-2022.html]
The survey included 300 High Net Worth (HNW) investors and business owners from the United Arab Emirates, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, Egypt and Lebanon, and respondents included both young investors (aged 18-40) and older generation investors (40+).
About Lombard Odier
Lombard Odier is a global wealth and asset manager and leader in sustainable investing. For more than 225 years and through more than 40 financial crises, the Group has been able to combine innovation and prudence to align itself with the long-term interests of private and institutional clients. The Group is solely owned by its Managers and has a solid, liquid and prudently invested balance sheet with a CET1 ratio of 28.5% and a Fitch rating of AA-.
Lombard Odier offers a full range of wealth services, including estate planning, discretionary and advisory portfolio management and custody. Asset management services are offered through Lombard Odier Investment Managers (LOIM). The Group has created state-of-the-art banking technology, which is also operated by other private banks and financial institutions based in Switzerland and Europe.
As of December 31, 2021, the Group had total client assets of CHF 358 billion. Based in Geneva since 1796, the Group had 26 offices in 21 jurisdictions at the end of December and employed 2,650 people.
For more information: www.lombardodier.com
Lombard Odier Group
1204 Geneva – Switzerland
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