Saudi Arabia Investment Funds: Types, Structures, Regulations & How They Work

Saudi Arabia has developed a large and diverse investment fund market. Funds can invest in equities, debt instruments, money markets, real estate, commodities and alternative investments. They give investors access to professionally managed portfolios without requiring them to select and manage every investment themselves. 

The market is regulated primarily by the Capital Market Authority (CMA)¹. Depending on how a fund is structured and offered, it may be public or private, open-ended or closed-ended, exchange-traded or designed for a specific investment strategy. 

The market has also grown rapidly. The CMA reported² that assets under management in Saudi Arabia exceeded SAR 1.2 trillion at the end of 2025, up 18% year on year. Private real estate fund assets reached SAR 356 billion, public money market fund assets reached SAR 77 billion, debt-instrument fund assets grew by 44%, and private equity fund assets increased by 31%. 

The regulatory framework is also evolving. In 2026, the CMA introduced Simplified Investment Funds³ and expanded the framework for Financing Investment Funds, creating new options for institutional and alternative investment strategies. 

Saudi investment funds at a glance

Before choosing a fund structure, it is important to separate three concepts:

• How the fund is offered: public or private
• How investors enter and exit: open-ended or closed-ended
• What the fund invests in: equity, real estate, debt, money market, commodities and so on

These categories can overlap. For example, a private fund can invest in real estate, while a public fund can invest in equities.

There are also specialised structures such as REITs, fund-of-funds, feeder funds, commodity, endowment, and capital-protected funds. 

Public and private investment funds

The first major distinction is between public and private funds. This describes how a fund is offered to investors. 

Public investment funds

Public funds offer their units⁴ to investors through a public offering. They can follow many different strategies. A public fund may invest in equities, debt, money market instruments, real estate or a combination of assets. 

A public fund must operate through a Capital Market Institution⁵ authorised to conduct the relevant fund-management activities. The fund manager prepares the fund documentation, defines the investment strategy and completes the applicable CMA process before offering the units.

Public funds are designed for a broader investor base, but the exact eligibility rules depend on the individual fund. Minimum investments, dealing dates, redemption rules and other conditions can vary.

Private investment funds

Private funds offer their units through private placement. They are often used for more specialised strategies, including private equity, venture capital, private real estate, debt and other alternative investments. 

The CMA maintains a register of private funds⁶. Being included in the register does not mean that the CMA endorses the fund or guarantees the commercial success of its investment strategy. 

Private funds follow a different regulatory route from public funds. The fund manager must submit the required notification⁷ to the CMA and meet the applicable private-placement requirements. 

The investor base is also more restricted. Private funds may target qualified, institutional or other eligible investors, depending on the offering. 

The CMA’s professional-investor framework includes several qualification routes⁸. For example, an individual may qualify through securities-market experience or financial capacity. One route requires at least 10 securities-market transactions per quarter over the previous 12 months, with a minimum total value of SAR 40 million. Another requires net assets of at least SAR 5 million, subject to the applicable conditions. 

Open-ended vs closed-ended funds

Public and private describe how a fund is offered⁷. Open-ended and closed-ended describe how investors enter and exit the fund.

This distinction is important because two funds with the same investment strategy can have very different liquidity arrangements.

Open-ended funds

An open-ended fund can generally issue new units when investors subscribe and redeem units when they want to leave, subject to the fund’s terms. This can provide a relatively straightforward way to enter and exit the investment.

For example, an investor puts SAR 50,000 into an open-ended equity fund. If the fund’s rules allow monthly redemptions, the investor can request to sell their units during the next redemption window and receive the value of those units, subject to the applicable conditions.

Closed-ended funds

A closed-ended fund generally has a fixed term and a defined number of units. Investors usually commit their capital for the fund’s investment period rather than having an ongoing redemption right.

This structure is common for private equity, venture capital and real estate, where investments may take several years to develop or sell.

For example, an investor commits SAR 500,000 to a five-year private real estate fund. The investor normally cannot ask the fund to return the capital after one year simply because they need the money. They may have to wait until the fund sells its properties and distributes the proceeds, unless the fund provides another permitted exit mechanism.

Investors may still have an exit option through a listing, secondary-market sale or another mechanism, depending on the fund’s terms.

Funds by investment type

Now, let’s have a look at what the funds actually invest in. The main categories include equities, debt instruments, money market assets, real estate, commodities and alternative investments. A fund can also combine several of these asset classes in a single portfolio. 

Equity funds

Equity funds invest mainly in company shares. Instead of selecting individual stocks, investors buy units in the fund and gain exposure to a portfolio managed according to the fund’s strategy.

A fund may focus on Saudi companies, a particular industry, a specific region or international markets.

Debt and financing funds

Debt funds invest in permitted debt instruments, including sukuk where applicable. They can suit investors who want income and diversification without relying entirely on equities.

Financing Investment Funds

The CMA also changed the rules for Financing Investment Funds⁹ in 2026.

Previously, these funds could only be offered through private placement. Under the amended framework, they can be publicly offered and may be listed on the Main Market or Parallel Market.

Money market funds

Money market funds invest primarily in short-term and relatively liquid instruments. Under the CMA framework⁷, these can include:

• Money market transactions with regulated counterparties
• Debt instruments
• Bank deposits with appropriately regulated banks or financial institutions
• Units of other public money market funds with a similar strategy
• Units of public fixed-income debt funds
• Certain derivatives, but only for hedging and subject to applicable limits.

In practice, these investments are designed to keep the portfolio relatively liquid and focused on short-term instruments. 

For investment platforms, money market funds can provide a more conservative investment option alongside equity, real estate and other products. 

Real estate funds and REITs

Real estate is one of the largest areas² of the Saudi fund market. Real estate funds can invest in properties, develop land or buildings, hold income-producing properties or follow other permitted real estate strategies.

Real estate is generally less liquid than listed securities. Many real estate funds therefore use longer investment periods and closed-ended structures.

Real Estate Investment Traded Funds (REITs) provide exposure to income-generating real estate while allowing their units to trade on an exchange. This can make REITs more liquid than a typical private real estate fund. 

Alternative investment funds

Alternative investment funds invest in assets and strategies that go beyond traditional publicly traded stocks, bonds, and money market instruments. Examples of such investments can be private equity, venture capital, distressed funds, and fund-of-funds.

Other specialised funds

Other funds can focus on specific investment objectives or structures. These include fund-of-funds, feeder funds, commodity funds, capital-protected funds, and endowment funds.

A fund-of-funds invests mainly in other investment funds, giving investors exposure to several underlying strategies through one fund. The CMA’s rules also set diversification requirements. A fund-of-funds must invest in at least three investment funds, and no more than 50% of its net asset value can generally be invested in a single investment fund.

A feeder fund invests primarily in another underlying fund. This structure can make it easier for different groups of investors to access the same underlying strategy through separate investment vehicles.

A commodity fund invests in permitted commodities or instruments that provide exposure to commodity prices. Depending on the fund’s strategy, the underlying exposure may relate to assets such as gold, oil or other commodities. 

A capital-protected fund is designed to protect investors’ capital under specific conditions while offering some potential for investment returns. The protection mechanism depends on the fund’s structure and terms. For example, protection may apply only if the investor holds the investment until a specified date. Capital protection should not be interpreted as a guarantee against every possible loss. 

An endowment fund is built around a defined long-term purpose. Instead of focusing only on short-term market performance, they manage assets according to objectives set out in the fund documentation. 

How to launch an investment fund in Saudi Arabia with LenderKit

If you are planning to launch an investment platform in Saudi Arabia, you need to determine the appropriate fund structure, meet the applicable CMA requirements, and choose the technology needed to operate the platform. 

This is where LenderKit’s white-label investment solutions can help. Instead of building an investment platform from scratch, businesses can use ready-made infrastructure for key functions such as investor onboarding, investment management, portfolio administration, and payments. The platform can then be adapted to the business’s investment model and branding.

For businesses targeting Saudi Arabia, LenderKit also provides a solution focused on the local investment and crowdfunding environment. Its technology can simplify the technical side of launching an online investment platform, while the business remains responsible for obtaining the required licences and meeting CMA regulations.

To see how the product works or discuss details, get in touch with our team.