59% Of Sovereign Wealth Funds Increase Assets In 2014, Despite Sharp Drop In Oil Prices by Preqin

The majority of sovereign wealth funds globally have increased their assets under management over the course of 2014. This is despite falling commodity and oil prices, which many of these institutions rely on for funding. The growth in assets, up from $5.38tn in October 2013 to $6.31tn in March 2015, has been driven by continued funding from governments and reserves, as well as from investment returns. Alternative assets are also becoming an important part of these institutions’ portfolios, particularly as they seek to diversify their portfolios and acquire assets that can generate yield and help meet their long-term objectives.

Sovereign Wealth Funds

Other Key Sovereign Wealth Funds Stats:

  • AUM Increases and Decreases: While 59% of sovereign wealth funds increased their assets under management over the past 18 months, 30% saw a fall in their AUM and 11% reported no change in assets.
  • Exposure to Alternative Assets: 70% of sovereign wealth funds invest in at least one alternative asset class, with 60% of these institutions investing in real estate and infrastructure.
  • Global Presence: A total of 73 sovereign wealth funds have been established worldwide. Forty-six countries have at least one sovereign wealth fund, and almost half (48%) of all funds globally have been in existence for over 10 years.
  • Helping National Development: Sovereign wealth funds are key in the long-term growth and development of national economies; 58% invest in economic infrastructure and 44% invest in social infrastructure.
  • Asia Hotspot: Asia-based sovereign wealth funds currently manage $2.7tn in assets (43% of all sovereign wealth fund capital), compared to $2.0tn managed by Middle East-based institutions.
  • Largest Sovereign Wealth Funds: Norway-based Government Pension Fund Global is the largest sovereign wealth fund worldwide with $818bn in assets under management. This is followed by the Abu Dhabi Investment Authority with an estimated $773bn in assets.

Sovereign Wealth Funds

Comment:

“Sovereign wealth funds, despite being small in number and secretive in nature, continue to capture attention due to their ever growing assets under management and their corresponding influence on global financial markets. While these institutions have significant investments in traditional public equity and fixed income markets, sovereign wealth funds are a growing source of capital to alternative asset fund managers and investments across the globe.

The influence of sovereign wealth funds in undeniable. These firms now manage over $6.3tn in assets, which have grown 17% over the past 18 months. This growth has also been in the headwind of falling oil prices, one of the main sources of funding for these institutions. Furthermore, many sovereign wealth funds have been growing their exposure to alternative assets, with 60% of these firms now having exposure to real estate and infrastructure investments.”

Amy Bensted – Head of Hedge Fund Products, Preqin