The Capital Market Authority (CMA) of Saudi Arabia has approved a comprehensive set of regulatory amendments aimed at further developing the investment fund industry in the Kingdom.
The amendments affect the Investment Funds Regulations, the Real Estate Investment Funds Regulations, and the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority.
According to the CMA, the enhancements are intended to improve the regulatory environment for investment funds by aligning it with international best practices, strengthening competitiveness, and improving overall investor protection. The amendments are part of the the CMA’s broader strategy to support the asset management sector and its growth as a key component of the national economy under Vision 2030.
The changes include updated rules to expand the distribution channels for investment fund units. Specifically, the amendments now allow investment fund distribution platforms and electronic money institutions licensed by the Saudi Central Bank to distribute fund units through digital channels, including websites and mobile applications.
The updated regulations also address the termination and withdrawal of fund managers, with new requirements that include obtaining CMA approval and ensuring the handover of fund responsibilities to a successor manager within 60 days of such approval. The amendments also include the development of additional regulatory provisions that support the growth of the investment fund and real estate investment fund sectors, enhance transparency and disclosure for fund unit holders, and establish governance standards that ensure greater protection of investors’ rights.
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In an effort to expand opportunities for Real Estate Investment Traded Funds (REITs) listed on the Parallel Market (Nomu), the new provisions allow such funds to invest in real estate development projects at the time of their establishment. These funds will not be bound by the standard investment ratios and asset restrictions defined in the Real Estate Investment Funds Regulations. This change is expected to support asset diversification and increase the flexibility of REITs to improve potential returns for investors.
Another significant amendment allows public funds to subscribe to debt instruments offered privately by issuers operating within the Kingdom. This provision removes earlier restrictions and enables public fund managers to participate in a broader segment of the debt market.
To manage risk, new rules have been introduced by CMA for money market funds and capital protection funds, including a 10 percent limit on investments in debt instruments issued by a single issuer and a 25 percent cap on total investments in a single entity, based on the fund’s net asset value.
To promote greater transparency, the CMA now requires public fund managers investing in debt instruments to disclose the credit ratings of their top ten debt holdings in quarterly reports. This is aimed at giving investors more visibility into the risk profile and creditworthiness of the assets held by these funds.
The CMA has also taken further steps to safeguard retail investors. A new provision limits the exposure of retail investors in private and foreign investment funds to no more than 50 percent of the total cash subscriptions in such funds at the time of the offering. In the case of closed-ended private or foreign funds, the transfer of fund units or securities must not, under any circumstances, result in retail investors holding more than 50 percent of the total value of the fund’s units or securities through cash contributions.
Additionally, the revised regulations allow licensed capital market institutions engaged in investment management to distribute and offer foreign funds in Saudi Arabia, subject to specific requirements. This development is expected to provide clients in the Kingdom with wider access to international investment opportunities and broaden the range of available financial products.
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The announcement of these amendments comes at a time of notable growth in the investment fund sector. In 2024, the CMA approved 44 new investment funds across multiple categories, including 15 equity funds, 5 money market funds, 7 endowment (Waqf) funds, and 4 exchange-traded funds (ETFs), in addition to real estate and other specialised funds.
By the end of 2024, total assets under management in the Kingdom’s investment fund sector reached approximately $186.7 billion (SAR 700 billion), representing a growth rate of 25.2 percent compared to 2023. Investment funds now constitute the largest segment of assets under management in Saudi Arabia’s capital market.
The CMA clarified that the approval of these amendments followed a structured and transparent regulatory review process. The authority launched three separate initiatives, each focusing on different regulatory components.
These initiatives were published for public consultation at different intervals, beginning in June 2024, followed by a second round in October 2024, and a final consultation in February 2025. Feedback from industry stakeholders was reviewed and incorporated prior to the final adoption of the regulatory changes.
By implementing these regulatory enhancements, the CMA aims to create a more robust, transparent, and investor-friendly regulatory environment that supports the continued growth of the asset management industry and strengthens the Kingdom’s position as a leading financial hub in the region.
