ADGM’s strong regulatory framework, built on transparency and efficiency, allows international companies such as PGIM to deliver solutions meeting global standards. Moreover, this forms part of a larger transformation that the UAE is currently undergoing as it takes giant strides towards becoming a progressive and forward-thinking financial hub.
Speaking to Economy Middle East on the sidelines of the recently-concluded ADFW, Phil Waldeck, CEO of PGIM Multi-Asset Solutions, discusses the reasons behind the company’s presence at ADGM, the advantages of a UAE office, and key economic factors that could influence the company’s multi-asset allocation decisions.
Edited excerpts:
What motivated PGIM to establish a presence in the ADGM, and how does this align with your broader global strategy?
We have been working with key institutional investors in the region for decades, and during this time, PGIM has worked with a combination of sovereign wealth funds, family offices and private investors for many years. While these relationships remain core to our business, we have identified three emerging trends that encouraged us to establish an on-the-ground presence this August in Abu Dhabi.
- Exponential growth of private investors: Medium to large family offices are increasingly adopting sophisticated investment strategies and seeking institutional-quality management services. By 2025, total assets under management by Middle Eastern family offices are likely to surpass $500 billion.
- Alignment with regional government strategies: Governments are harmonizing global investment strategies with local economic, social, and environmental initiatives, creating opportunities for solutions aligned with these goals.
- Institutional investors driving tailored investment strategies: Major institutions are taking lead roles in funding investments that fill gaps in risk-return profiles, often unavailable in standard products.
Establishing a presence in ADGM reflects the Middle East’s growing role as a global capital hub, and the ADGM’s innovative regulatory framework and collaborative ecosystem enable us to bring world-class financial solutions to investors. PGIM is well equipped to offer bespoke investment solutions that align with the region’s economic growth and transformation. Abu Dhabi remains a key market for us, and the establishment of our new legal entity in ADGM emphasizes our ongoing dedication to our presence in the UAE and our commitment to the Middle East.
Read: PGIM secures ADGM license, opens office in Abu Dhabi
How will PGIM’s offerings, such as fixed income and private credit, meet the needs of investors in the region?
As a global leader with $1.4 trillion in assets under management, PGIM offers deep expertise across a range of asset classes, including private alternatives (real estate, agriculture, private equity secondaries, and many private credit strategies), fixed income, equities, multi-asset solutions, and retirement services. Having worked with clients for several years in the region, we believe we are well positioned to deliver tailored solutions for investors.
Since obtaining our ADGM license, we have focused on collaborative initiatives with regional partners. We recently announced our strategic partnership with Abu Dhabi Investment Office, which aims to establish an innovation center in the region, as the latest partnership for our RealAssetX platform, focusing on AI, sustainability, and deep tech.
From an investment perspective, we recognize that regional institutions maintain higher allocations to alternative investments compared to global averages. This trend toward diversification is reflected in broader allocations across asset classes, addressing regional investors’ evolving needs.
We are also exploring ways to contribute to the development of private pension systems in the UAE and the wider region, aligning with local priorities for long-term financial sustainability.
How does operating under ADGM’s regulatory framework enhance your ability to serve clients in the Middle East?
ADGM’s internationally benchmarked regulatory framework ensures transparency, efficiency, and legal certainty, enabling us to deliver solutions that meet global standards of compliance and governance. Its focus on fostering collaboration within its ecosystem enhances our ability to connect with regional investors and partners. Operating within this framework enables us to tailor our sophisticated products to regional needs while maintaining the trust and credibility PGIM is known for globally.
In your opinion, what factors make the UAE particularly attractive for global capital?
The UAE’s recent financial reforms highlight its commitment to establishing a progressive and forward-thinking financial hub. These reforms reflect the ‘We the UAE 2031’ vision and ‘UAE Centennial 2071’ plan, fostering a more accessible financial ecosystem, ultimately benefiting both investors and businesses in the region.
The institutionalization of private wealth deployment in the region is reflected in the exponential growth of sophisticated regional and international family offices. Recent financial reforms have further enhanced the UAE’s attractiveness as a financial hub, inviting innovative investment opportunities.
How are macroeconomic factors influencing your multi-asset allocation decisions for pension funds and other institutional investors?
Macroeconomic factors are an important data point in our dynamic asset allocation and portfolio management decisions. There are four themes that investors need to navigate through 2025. Firstly, US interest rates, and specifically whether the market anticipation of the pace of rate cuts is wrong. Second, the impact of increased geopolitical risks and uncertainty. Third, how the Republican Party and Trump policy agenda will impact markets and whether the market’s current interpretation of this being broadly positive for equity markets and economic growth is correct. Lastly, stretch valuations. Given the uncertainties in the interest rates market, we have a neutral stance on interest rates and believe it’s important to hedge the overall interest rate risk as well as risk across the interest rate curve for liability-focused clients such as pensions.
We remain cautiously constructive on credit spreads given strong fundamentals but all-time-tight spreads. Within credits, we prefer to maintain higher credit quality and structured products given better return vs. risk tradeoff currently. Similarly, we maintain a cautiously constructive view on equity markets, particularly the US, underpinned by robust earnings growth. Valuations are higher though, which warrants careful attention and should temper return expectations in the near term.
What innovative approaches does PGIM employ to mitigate risks while optimizing returns in multi-asset portfolios?
We have innovated across the following areas to help optimize returns while mitigating risks. We have developed a comprehensive investment process that encompasses a robust strategic asset allocation, which takes into account unique client objectives and constraints while optimizing for returns per unit of risk over a full market cycle, complemented by a dynamic asset allocation process that can seek to add additional value by capitalizing on market dislocations. To achieve these goals, we have developed robust tools for these efforts:
Strategic asset allocation
We built a custom toolkit that allows us to optimize multi-asset portfolios on a client-by-client basis. This allows us to base risk/return projections and portfolio construction around the specific factors that are unique to each client. A key capability that can be integrated into the portfolio construction process is the generation of hundreds or thousands of economic scenarios, ranging over all relevant risk factors such as rates, corporate and securitized spreads, FX, and equity returns. One of the most distinctive aspects of our approach to optimizing the portfolios of our clients is the ability to look across both public and private markets. This has traditionally been difficult because private markets data has been hard to come by, but PGIM operates one of the largest, most sophisticated, and long-tenured private markets investment platforms and we benefit from enormous amounts of historical data as a result.
Dynamic asset allocation
We have developed relative value dashboards that allow us to look at near-term cross-asset return vs. risk tradeoffs using daily market data. This provides us with insights to help us rotate between asset classes and inform attractive entry points for new investments, within the guidelines and risk tolerance informed by our clients. We continue to enhance these relative value dashboards to bolster the number of metrics and help bolster the predictive power of these dashboards.
Most importantly, we have investment talent with deep expertise and experience managing public and private assets with the judgment to deploy these tools well to manage risk and capture investment opportunities.
We seek to innovate through developments of investment vehicles that allow our clients to access new asset classes and strategies with attractive return profiles while meeting the regulatory requirements unique to our clients’ jurisdiction. The collaboration across different PGIM investment teams, supported by the legal, compliance, and operations resources help make innovations across these vehicles/instruments possible.
