Tue, Jan 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Low yield environment increases sovereign wealth fund pressures

Thursday, August 30, 2012

amb
Terrence Keeley
Bailey McCann, Opalesque New York:

Low nominal rates and the end to so-called "risk free" investing is adding to the growing pressure on sovereign wealth funds (SWFs) to perform. Relative to pre-2008 levels, official institutions which hold some $10tn in foreign exchange reserves lose approximately $250bn a year. This reality is forcing sovereign wealth funds to critically examine their investments and look for ways to recapture some of those losses.

"Managers of public wealth have been impacted by the crisis like every other investor, institutional and individual. They have realized that there are no longer assets that are entirely risk free. They are under huge pressure to find more income; since 2008, because of the decline in nominal rates, they are earning hundreds of billions of dollars less," explains Terrence Keeley, Global Head of BlackRock’s Official Institutions Group,in an interview with Opalesque.

As a result, many of these funds are adding to their allocations in alternative investments in order to more quickly recuperate losses and generate returns. However, given the source of those allocations, unique considerations come into play. Prior to 2008, the bulk of these funds relied on foreign exchange reserves to generate income, now, the home states of these funds find themselves on significantly shakier financial ground that they have previously. In some cases, sovereign funds are now included in the growing ranks of risk......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - This hedge fund made 37% betting on banks in 2016 and remains bullish after the Trump rally, Hedge fund legend David Einhorn is making a big bet on GM, After impressive 85% return in 2016, hedge fund looks to Canadian gold producer, small banks[more]

    This hedge fund made 37% betting on banks in 2016 and remains bullish after the Trump rally From Forbes.com: Can bank stocks continue to rise after a 28% surge in the KBW Bank Index in 2016, fueled by a post-election rally as stock pickers returned to the beaten down sector? Forget the s

  2. SWFs - China sovereign wealth fund CIC plans more U.S. investments[more]

    From Reuters.com: China Investment Corporation (CIC), the country's sovereign wealth fund, is looking to raise alternative investments in the United States due to low returns in public markets, its chairman said on Monday. CIC will boost its investments in private equity and hedge funds as wel

  3. Some hedge funds strong start in 2017 nice contrast to 2016[more]

    With the 2016 HSBC Hedge Weekly performance rankings in the books - a year in which the same leader-board entries pretty much dominated unchallenged throughout the year - comes a new leader board that is a hard-scrabble mix of hedge fund styles and categories. What is clear after but a few short wee

  4. Macro hedge funds and CTAs outperform in December on strong dollar[more]

    Komfie Manalo, Opalesque Asia: The last month of 2016 saw risk assets climbing higher, as part of expectations that the new U.S. administration will remove barriers to growth and investment, Lyxor Asset Management said. December also saw the Fed hik

  5. Opalesque Exclusive: Roxbury credit events UCITS gathers more assets[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The Roxbury Credit Events Fund, launched in September 2015, was up 4.24% in 2016, having returned seven positive months during the year. The managers raised