For years this region was seen as a destination for capital — a place for global funds to park money. That is changing. Investors are now looking at the Gulf as a serious place to build strategy, not just deploy it. Joining me is Jeffrey Sexton, Chief Executive Officer of Demeter Tactical Investment. Jeffrey, welcome to Wall Street to Mena.
Thank you. Thank you for having me.
Why does Demeter now operate out of Abu Dhabi?
For a couple of reasons. This is the new land of opportunity in the world. The US, unfortunately, is the land of overregulation — that is what happens when you have been doing it for 200 years and everyone thinks there are conmen and frauds everywhere. Regulation has overtaken the financial industry in America. Here, the leaders have vision. They have not overregulated things. There is still the opportunity to grow and build. And an investment strategy such as ours cannot be run in a punitive tax regime like the United States. The tax regime here in the UAE is very favourable. I have found an entire world of investors here who are not taxed on the returns we generate for them. It has been a very welcoming reception.
Is it regulations and taxes that drive investment to the UAE?
There are obviously people who come here thinking money falls from the trees and that sovereign wealth funds will sprinkle capital everywhere. That is simply not true. The investors here are sophisticated and very careful with their investment decisions — but they are also pragmatic, open-minded, and not shackled by income tax rates of up to 50% as you see in the US and the UK. There is a real opportunity here to do business with sophisticated people who can actually take advantage of the returns we offer without giving half of it back to the government.
You built your name on Wall Street. What is the one thing you had to unlearn to operate here?
Humility. You do not arrive from America as a cowboy riding to the rescue of the UAE. I had to unlearn that completely. This is not the Middle East of Hollywood. This is Abu Dhabi, the UAE — very different from any stereotypical idea of what the Middle East is. I had to learn humility, understand the culture, recognise that I was a foreigner in a foreign land, start from the ground up, do what the regulators asked, hire local employees, get my license, and genuinely immerse myself in the business and social culture of Abu Dhabi and Dubai over the last three and a half years. It is paying off, and I could not be happier with what I have discovered 7,000 miles from home.
Demeter makes one call every day — equities or cash. Walk us through what goes into that call.
We use intellectual property I developed at the University of Chicago, where I studied under Nobel Prize winner Eugene Fama. The strategy is based on five algorithms — and notice: no artificial intelligence, no machine learning. Five algorithms exploiting five known phenomena from the academic literature: mean reversion, volatility clustering, volatility risk premium, and others. At 3:59pm New York time every trading day, those algorithms decide whether tomorrow is likely to be a positive or negative day in the S&P. If not, we stay in cash — which happens roughly 50% of all trading days. If they detect tomorrow will be positive, 50% of the portfolio goes into S&P futures, 50% into Nasdaq. If all five algorithms are in beautiful harmony — like a choir of angels — we take on a little leverage. If we have leverage, we hedge going into overnight because you never know what comes out of the White House at 3am. Next day, we do it all over again. Simple concept, complex math, but refined and repeatable. We trade only at the index level — no individual company earnings, no individual announcements.
No AI at all. Just algorithms.
Correct. Do you know what I use? Three-thousand-year-old Pythagorean geometry. Three thousand years before the law. You mean you don't use Claude or ChatGPT? No — I use Pythagoras. That one hasn't arrived yet.
Where is the natural investor for Demeter in this region?
Any investor looking for exposure to the US stock market. Sovereign wealth funds have US stock market investments. Family offices. We are even working with some local banks to potentially offer retail investment through their wealth management platforms. The way we trade S&P and Nasdaq futures — they are very deep, very liquid. We can move billions of dollars in and out of both indices in under a minute, which makes us very attractive to sovereign wealth funds. And unlike in the US, investors here do not face punitive short-term capital gains tax on daily trading.
Five years from now, where does Abu Dhabi stand next to New York?
Abu Dhabi is sitting on an incredible opportunity. It is what New York was before regulation consumed all the opportunity. If they play their cards right, if the sovereigns help local funds like Demeter grow — a fund like ours should be and could be the Citadel of Abu Dhabi. Why send money from this country back to New York, London, or Paris? If money is grown and managed here, it will attract other GCC investors. The world does not need another New York City — one is enough, and it is great. But the world needs Abu Dhabi to be the best it can be. It is sitting on an enormous opportunity in the next five years to stand shoulder to shoulder with New York.
And it already is a financial centre.
It already is. It can be a bigger one.
Thank you so much for being with us today.
Thank you for having me. It is great to be here.
