Some of the most influential investors in the Gulf country of Kuwait are taking a defensive approach to portfolio management this year amid growing geopolitical tensions in the region and further afield.

Asif Khan, the CIO for Action Group Holdings (AGH), said that the precarious geopolitical situation, including escalating tensions in Iran and Venezuela, only underscores the importance of portfolio management and manager selection. Action Group manages the money of the ruling family of Kuwait, the Al-Sabahs.

“Across the coming year we will be more defensive and very proactive when it comes to the due diligence of our entire investment activity,” said Khan. The holding company holds assets such as the Action Hotel Company, which owns more than 20 global hotels; a property portfolio called Action Real Estate; an energy business that has a 15 percent market share of the country’s oil drilling business; and EBLA Computer Consultancy, which is the sole partner with Microsoft in Kuwait and is developing two data centers.

“We call ourselves wealth professionals, but we are wealth engineers. We are constantly monitoring all of the investments and positions that we have, and whichever are at risk we take action on,” he said.

He believes that multiple asset classes will be impacted by geopolitics; only some in a positive way. Private and public market equities are performing well now but are volatile, Khan said, adding that fixed income is promising because of potential interest rate cuts. He is also “beefing up” private equity and real estate holdings.

While current market conditions may call for some tweaks, AGH is focused on the long term and maintains a strict due diligence process — even if it means missing out on opportunities. “There is a manager selection process to decide who is correlating with my existing portfolio and how the different teams, sectors, and regions are plugged into my existing portfolio,” he said.

Another key player in the Kuwait market is Development Enterprises Holding (DEH). Mohammad Al-Jouan is the director of M&A at the holding company, a subsidiary of Kuwait Finance House, a listed Islamic bank with the country’s sovereign wealth fund as its major shareholder.

Al-Jouan said that the firm is focused on businesses with high growth potential in the consumer sector.

Investments include convenience store company Canteen and regional coffee company 20 Grams Coffee. The firm buys between 60 and 80 percent stakes in companies to keep the founders involved.

Al-Jouan said Kuwait has been able to avoid the economic hits suffered by other countries. 

“Business in Kuwait won’t win you phenomenal returns like you get in other parts of the world, but it will guarantee you value creation and steady growth. What comes quickly, goes quickly.”

DEH has moved away from the U.S. to an extent, because of the geopolitical environment. There is more value to be found elsewhere. “In Europe, Germany, the U.K., parts of Italy, France, there are very good private equity opportunities,” Al-Jouan said.