GLOBAL: Islamic equity funds in the GCC region posted moderate growth in Q1 2025, outperforming the broader Middle East regional industry average – despite mixed returns across individual markets. This asset segment recorded an average return of 0.73%, compared to the regional industry average of -1.3%, according to the IFN Investor Funds Database.
Kuwait led regional performance, with 12 Islamic equity funds achieving an average three-month return of 3.79%. Strong active management, a balanced allocation across industrial and financial services as well as effective risk diversification supported gains during the first quarter.
The UAE followed with an average return of 2.14% across 14 funds. Banking, real estate and industrial services sectors were key contributors to performance, supported by favorable macroeconomic conditions including strong credit growth and improved banking profitability.
Bahrain posted a steady three-month return of 0.91% from its two funds, maintaining a conservative allocation approach. Saudi Arabia, the largest market with 148 funds, delivered a modest return of 0.63%, with top-performing funds diversifying into offshore markets and safer assets. However, sector headwinds – such as oil price concerns – tempered overall gains.
Oman posted an average three-month return of -0.97%, while Qatar recorded the lowest return at
-2.1% – impacted by weaker economic sentiment, lower government revenue and foreign investor outflows.
Despite varying results, the region’s overall positive return was driven by strong performance in select markets and strategic fund positioning, underscoring the importance of asset diversification and proactive management amid evolving macroeconomic pressures.
