BATOOL GHAITH (ABU DHABI)
The UAE is increasingly attracting global hedge funds and investment firms as it strengthens its position as a major global financial hub.
In recent years, both Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) have recorded rapid growth in asset managers and hedge funds establishing regional headquarters, reflecting the country’s broader ambition to become a global centre for investment and wealth management.
Abu Dhabi has emerged as a key destination for global investment firms. ADGM reported strong expansion in the asset management sector, with 134 asset and fund managers overseeing 166 funds at the end of 2024.
Meanwhile, DIFC now hosts more than 100 hedge funds, positioning it among the top five global hubs for hedge fund managers. Since early 2024, the number of hedge fund managers in DIFC has more than doubled from about 50 to over 100, with 81 funds each managing more than $1 billion in assets.
Both Abu Dhabi and Dubai ranked among the world’s leading financial hubs in the inaugural Global Financial Centre Competitiveness Index (FCCI), with Abu Dhabi placed first in the Middle East and North Africa, and 12th globally, followed by Dubai in 14th place.
The UAE’s investment environment is further supported by its sovereign wealth funds, among the largest globally. According to Global SWF, Abu Dhabi’s key state investors — Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company and ADQ — collectively manage around $1.7 trillion in assets.
Dr Nasser Saidi, President and Founder of Nasser Saidi & Associates and former Chief Economist at the DIFC Authority, said the UAE’s financial free zones, regulatory infrastructure and access to sovereign wealth capital have created a strong foundation for the country’s fast-growing hedge fund industry.
He noted that both DIFC and ADGM operate under independent English Common Law jurisdictions, providing global managers with a familiar legal framework distinct from the UAE’s civil law system.
“These financial free zones have refined these frameworks to emphasise institutional governance and digital asset transparency, increasing their credibility globally,” Saidi told Aletihad.
The favourable tax environment, including 0% personal income tax and a targeted 9% corporate tax, allows fund principals and their teams to retain a significantly higher share of performance fees compared to London, New York or Singapore, he added.
Saidi also highlighted that long-term residency options, an attractive living environment and strong connectivity are encouraging fund founders to relocate with their families rather than operate on a transient basis.
“The UAE also has a significant time zone advantage allowing for global coverage, meaning managers can catch the closing bell in Asia, trade the full session in Europe and remain active for New York in the afternoon,” he said.
Looking ahead, Saidi said the UAE’s hedge fund ecosystem is expected to expand further over the coming decade. “Given Dubai’s Virtual Assets Regulatory Authority (VARA), the UAE is becoming the global headquarters for hybrid funds, funds that manage traditional equity or macro strategies alongside significant digital asset portfolios, all within a single regulated jurisdiction,” he explained.
Over the next few years, Saidi expects regulatory developments to allow qualified retail investors to participate in private funds, potentially unlocking a significant new domestic capital pool.
“As seen in the latest Global Financial Centres Index, Dubai is already placed among the top 10 centres globally. With time, we expect the UAE to host the regional headquarters for major brokers, fund administrators and specialist legal firms, reducing reliance on London or New York for back-office support,” he added.
Proximity to institutional investors such as sovereign wealth funds and family offices is another key driver of growth in the hedge fund ecosystem.
Middle Eastern sovereign wealth funds have increased their hedge fund allocations by 11% to nearly $500 billion as of late-2025, according to Saidi.
“Being located where the sovereign wealth funds are helps hedge funds provide face-to-face accountability, greater transparency and the ability to land co-investment opportunities that offshore managers often miss,” he added.
He also pointed to the growing role of family offices in the region. “Single-family offices in the region average around $900 million in assets under management and these entities are shifting from passive real estate investments to more sophisticated alpha-seeking hedge strategies,” he said.
Saidi said global economic conditions are also contributing to the expansion of the hedge fund industry. “The world is witnessing growing economic dislocation, deep global structural shifts driven by rapid technological change and the growth of the digital economy and digital finance; a shift towards China and Asia, and demographics with the rise of Africa,” he said.
Economic dislocation, deglobalisation, rising protectionism and economic nationalism in the US and Europe are also being reinforced by increasing geo-economic and geopolitical risks and uncertainty.
“The hedge fund industry will thrive, supporting investors in addressing the drivers of change and uncertainty, with the UAE offering a rare combination of geographic location, jurisdictional neutrality, institutional-quality regulation and immediate access to the world’s most active sovereign capital and institutional investors,” Saidi added.
Ryan Lemand, Co-founder of Neovision Wealth Management, said sovereign wealth capital is not merely a source of liquidity in the UAE, but a foundational driver of the ecosystem.
“When ADIA, Mubadala and ADQ anchor the market, they set the tone for risk appetite, governance standards and long-term investment horizons,” Lemand told Aletihad.
He added that global hedge funds are drawn to the UAE not only for deal opportunities but also for the nature of the capital available.
“Hedge funds do not just come here for deal flow, they come because the capital base is patient, sophisticated and genuinely global in its orientation,” Lemand said.
The country’s structural advantages also play a key role. “It is a combination of factors that rarely align so cleanly elsewhere. Zero capital gains tax, a time zone that bridges Asia and Europe, a deep pool of internationally trained professionals, and regulators who understand the product,” he noted.
Lemand added that political stability further strengthens the UAE’s appeal. “When you add genuine political stability, and accelerating bilateral investment treaty coverage, the structural case becomes almost self-evident,” he said.
At the same time, the country’s expanding financial ecosystem is creating a self-reinforcing cycle that continues to attract new firms. As more Tier 1 managers establish a presence, talent migrates, service providers follow, legal precedents build, and barriers to entry decline.
“The UAE is no longer positioning itself as an alternative to traditional financial centres, it is becoming one,” Lemand noted.
