Assets under management (AuM) across the Gulf Cooperation Council (GCC) climbed to $2.7 trillion in 2025, marking a 10% year-on-year increase and one of the region's strongest annual performances in more than a decade. Yet the numbers tell only part of the story. According to Boston Consulting Group's latest Global Asset Management Report 2026, the industry is approaching a turning point where future growth will be driven less by rising markets and more by firms' ability to attract investors, harness artificial intelligence, and build stronger distribution networks. As competition intensifies globally, the report suggests that GCC asset managers have an opportunity not only to capitalise on the region's expanding wealth but also to redefine how investment businesses are built and scaled.

Retail investors are becoming a larger growth engine

Institutional investors continue to dominate the GCC market, accounting for 93% of regional assets under management. However, retail investment is expanding at a much faster pace.

Retail AuM grew 14% in 2025, compared with 9% for institutional assets, suggesting individual investors are gradually playing a larger role in regional capital markets.

Saudi Arabia remains the region's largest retail investment market, leading both the GCC and the wider Middle East in retail mutual funds and exchange-traded funds (ETFs). The UAE and Kuwait follow, while the Kingdom's General Organization for Social Insurance Public Pension Agency (GOSI-PPA) remains the region's largest pension fund. Kuwait Investment Authority continues to hold the largest pool of externally managed sovereign wealth assets in the GCC.

Although retail assets still represent only around 7% of total AuM, their faster growth reflects a broader shift as individual investors become an increasingly important source of capital for the region's financial markets.

Market growth alone is no longer enough

The report argues that the industry's biggest challenge is no longer growing assets but sustaining profitability.

Globally, assets under management reached $147 trillion in 2025, up 11% from the previous year. However, more than 80% of revenue growth was driven by rising financial markets rather than fresh client inflows. At the same time, fee compression and mounting technology investment are making it harder for firms to translate higher assets into stronger earnings.

The result is a more competitive landscape where attracting new capital matters more than simply benefiting from favourable market performance. Firms capable of consistently generating net inflows are increasingly separating themselves from the rest of the industry.

Distribution is becoming the industry's competitive edge

One of the report's central conclusions is that distribution is overtaking investment performance as the industry's primary competitive advantage.

As investment products become increasingly standardised, firms are competing less on what they manufacture and more on how effectively they reach investors. Control of distribution channels, whether through banks, wealth advisers, digital investment platforms or institutional partnerships, is becoming the defining factor in capturing new assets.

For GCC asset managers, this shift is particularly significant. The region's expanding retail investor base, combined with rapidly developing digital financial infrastructure, creates an opportunity for firms that invest early in scalable distribution capabilities.

As Lukasz Rey, Managing Director and Partner and Middle East Head of Financial Institutions at BCG, notes, firms that strengthen both their distribution capabilities and technological infrastructure will be best positioned to navigate an increasingly competitive market.

AI is changing the economics of asset management

Artificial intelligence is expected to reshape the industry's operating model rather than simply improve efficiency.

BCG estimates AI could reduce operating costs by 25% to 35% over the next three to five years while expanding investment research coverage by two to five times and allowing relationship managers to serve significantly more clients through personalised advice and automation.

The report argues that AI enables firms to scale without proportionally increasing headcount, fundamentally changing the economics of growth. Yet despite its potential, most asset managers remain in the early stages of adoption, focusing on pilot projects instead of redesigning their organisations around AI-enabled workflows.

For GCC firms, this presents an opportunity to leapfrog traditional operating models by embedding AI into core investment, client servicing and operational functions from the outset.

Tokenisation could reshape financial markets

Alongside AI, tokenisation is emerging as another structural force with the potential to redefine the industry.

BCG projects the value of tokenised real-world assets could reach $14 trillion by 2030 before expanding to $55 trillion by 2035, opening new channels for ownership, distribution and product development.

For financial centres across the GCC, where regulators have actively embraced digital assets and financial innovation, tokenisation could accelerate the development of new investment products while lowering barriers to entry for both investors and asset managers.

A new phase for the Gulf's investment industry

The GCC's asset management industry enters this next chapter from a position of strength, supported by deep pools of institutional capital, growing retail participation and some of the world's largest sovereign investors. But scale alone will no longer guarantee success.

As investment products become increasingly commoditised and technology reshapes every stage of the value chain, firms will need to compete on distribution, operational efficiency and personalised client experiences rather than assets alone. Those that successfully integrate AI into their operating models while building stronger investor networks will be best positioned to capture the industry's next wave of growth.

For the Gulf, the challenge is shifting from benefiting from favourable market conditions to building an asset management ecosystem capable of competing on a global stage. If BCG's outlook proves accurate, the region's next growth story will be defined not by how much capital it manages, but by how intelligently it manages it.