With $2 trillion in investable assets, a young population and low household penetration of mutual funds, what are the key criteria for a more sustainable Middle East asset management business post-crisis?

Today I gave a keynote speech at the Fund Forum Middle East in Bahrain on “Back to Basics: a new model required?”, followed by a CEO global thought leaders panel including European banks, local hedge funds, global multi-managers and global custodians.

A few of the main points during my presentation (go to http://www.globalfunddistribution.com for data slides and full commentary) included:

-Back to basics with a focus on organizational stability, investment processes and brand has benefited numerous global fund managers and boutiques in 2009 (Pimco, Carmignac, Schroder, BlueBay, HDFC, China AMC, iShares, Nomura, E Fund, Aberdeen and others).

-85% of flows continue to go to local products; thus, despite the absolute growth of offshore fund flows, global business expansion cannot solely rely on the latter.

-While not decoupling – for now – Asia, Latin America and the Middle East are building regional hubs that have partially insulated them from the crisis in the US and Europe.

-The global middle class will grow from 450 million to 1.2 billion in the next 15 years, with most growth in China and India. Traditionally, mutual funds have been the main vehicle for retail investors to achieve long-term retirement goals.

-The GCC has underperformed its broader emerging market peers in the last 12 months, but selected MENA funds have been able to gather meaningful assets.

-Emerging markets including Asia, Latin America and the Middle East will drive growth for the mutual fund industry worldwide in the next 3-5 years. For instance, HNW investors in Asia-Pac will surpass North America by 2013.

-However, product demand and asset allocation views for advisors and investors in those “emerging” markets are fundamentally different from its “developed” market peers and international fund managers will have to realign headquarter-centered thinking to build a sustainable brand and business there.

The panel discussion afterwards and throughout the day touched on the following themes:

-Concentrated marketplace: For most international fund managers, the majority of AUM come from a handful of institutional and family office.

-Churning and lessons learnt: The fast money has left the region and some HNW investors are recognizing the value of professional money management post-crisis.

-Coordinated efforts needed: Unlike Asia and Latin America, stimulus packages in the region have been small and not coordinated.

-Transparency, communication and international managers: Part of the reason why GCC/MENA has not gathered similar assets as other emerging markets is due to the lack of transparency and disclosure. While adding competition, local managers hope that the arrival of international fund managers will improve business conditions.

-Resource- vs. people rich: While Asia and Latin America are people-rich, the Middle East is resource-rich, leading to a different set of challenges and opportunities for growth.

-Oil, the gift and the curse: Asset management flows depend heavily on the price of oil – yet, the very young industry has developed faster than many other regions and regulators are slowly paving the way towards long-term retirement savings.