October 2010:- Sovereign Wealth Fund’s assets under management have now reached $4 trillion and could rise to more than $6 trillion in 2012, predicts the Sovereign Wealth Fund Institute. The funds have thus become exceedingly important players in global markets and are dwarfing hedge funds with capital estimated at $1.5 trillion.
The consultants have formulated a “Strategic Index” that follows performance and holdings of state investment funds. The index has declined by 0.6%, year to date This compared with a gain of 34.6% in 2009 and a decline of 33.8% in 2008. Performance has been lack lustre because of a high weighting in financial stocks. Hedge fund holdings have not been mentioned, but according to consultant Preqin’s 2010 Sovereign Wealth Fund Review, the bulk of assets are in bonds and equities. Some 37% of all SWFs, however, allocate to hedge funds, 57% to private equity, 51% real estate and 47% in infrastructure. Commodities don’t feature, although Middle Eastern, Asian and Norwegian SWFs are active investors in energy and mining stocks, while some have holdings in gold.
The Government of Singapore’s Investment Corporation, Temasek, China Investment Corporation, Abu Dhabi, Alaska Permanent Fund Corporation, Korean Investment Corporation, Norway Government Pension Fund and Libya, have a proportion of their funds in hedge funds, according to the consultants.
Three sectors appeared to be particularly attractive to SWFs: financial services (19 deals, $7.4 billion); natural resources (16 deals, $4.3 billion); and utilities (6 deals, $4.3 billion).
Sovereign Wealth Nations’ Investment assets ($ billions)
| Abu Dhabi Investment Authority | 627 |
| NorwayGovernment Pension Fund | 512 |
| China SAFE Investment Company | 347 |
| China Investment Corporation | 333 |
| Singapore GIC | 248 |
| Hong Kong Monetary Authority | 228 |
| Kuwait Investment Authority | 203 |
| China National Social Security Fund | 147 |
| Russia National Welfare Fund | 143 |
| Temasek Holdings (Singapore) | 133 |
| Libyan Investment Authority | 70 |
Source Sovereign Wealth Institute