Investors in the Middle East are increasingly turning to factor-based strategies in an effort to offset stock market volatility amid global economic uncertainty, high inflation and rising interest rates, according to a new survey by asset manager Invesco.
More than 50 per cent of respondents to the survey believe the current market environment makes factor investing in fixed income a better strategy to manage volatility and diversify their portfolios, Invesco said in the study, which polled 151 global institutional and retail factor practitioners managing more than a combined $25.4 trillion in assets.
“The use of factor strategies continues to rise as regional investors become more experienced and recognise the strength of an alternative approach in understanding the relative performance of their portfolios,” said Zainab Faisal Kufaishi, head of Middle East and Africa at Invesco.
Factor investing is a strategy in which securities are chosen based on either macroeconomic or style attributes that tend to offer favourable risk and return patterns over time, Invesco said.
Style factors typically include variables including lower-risk value stocks and financially healthy companies, while macroeconomic factors take into account the likes of economic growth, interest rate movements and political and sovereign risks.
Global economic uncertainty — compounded by the Russia-Ukraine war, supply chain crunch, rising inflation and higher interest rates — has increased volatility in financial markets in 2022, causing them to fall into bear territory and end the 13-year bull run.
Investors generally see fixed income returns as closely tied to fundamental macroeconomic variables, Invesco said.
Respondents to the study applied a systematic approach to their fixed income portfolios to prioritise traditional macro drivers of return, such as inflation and interest rates, before later incorporating investment factors such as value, it added.
However, 54 per cent of respondents said they use both macro and investment factors, and only 14 per cent target investment factors in isolation.
“Investors see factor investing as a flexible strategy that allows for both short-term tactical implementation during periods of market volatility, as well as an enhanced or index-plus approach for long-term strategic allocation against benchmark performance,” Ms Kufaishi said.
Persistent inflation and rising interest rates over the past 12 months have “dramatically impacted the investment environment”, leading to investors re-evaluating their portfolios, including factor exposures, Invesco said.
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Watch: US Federal Reserve chief warns of 'pain' in reducing inflation
Despite these challenges, 67 per cent of respondents to the survey said factor investing helped them to manage market volatility over the past year, while 64 per cent indicated their faith in factors grew over the previous 12 months.
Factor allocations are also rising, with 41 per cent of those polled saying they had increased allocations over the past year and 39 per cent are planning to increase them over the next 12 months, Invesco said.
Respondents to the survey also expect value, low volatility and quality to be the best performing factors over the next 12 months.
Meanwhile, more than 80 per cent of respondents believe their factor allocations have met or exceeded the performance of their fundamental active strategies and 64 per cent indicated their factor allocations met or exceeded performance compared to market-weighted strategies.
“The confidence in factor-based investment strategies has not only persisted in volatile times but grown stronger as their performance has recovered over the past 18 months,” said Georg Elsaesser, senior portfolio manager of quantitative strategies at Invesco.
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Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
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Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
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RESULT
Brazil 2 Croatia 0
Brazil: Neymar (69'), Firmino (90' 3)
PREMIER LEAGUE FIXTURES
All times UAE ( 4 GMT)
Saturday
West Ham United v Tottenham Hotspur (3.30pm)
Burnley v Huddersfield Town (7pm)
Everton v Bournemouth (7pm)
Manchester City v Crystal Palace (7pm)
Southampton v Manchester United (7pm)
Stoke City v Chelsea (7pm)
Swansea City v Watford (7pm)
Leicester City v Liverpool (8.30pm)
Sunday
Brighton and Hove Albion v Newcastle United (7pm)
Monday
Arsenal v West Bromwich Albion (11pm)
Movie: Saheb, Biwi aur Gangster 3
Producer: JAR Films
Director: Tigmanshu Dhulia
Cast: Sanjay Dutt, Jimmy Sheirgill, Mahie Gill, Chitrangda Singh, Kabir Bedi
Rating: 3 star
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
UAE currency: the story behind the money in your pockets
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
