Thu, Jan 29, 2015
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 - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  2. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  3. Update: Prosecutors seek 12 years for hedge fund manager Francisco Illarramendi[more]

    Komfie Manalo, Opalesque Asia: Federal prosecutors have asked the court to sentence convicted hedge fund manager Francisco Illarramendi to 12 years imprisonment for running an elaborate Ponzi scheme that bilked investors hundreds of millions in dollars, including a Venezuelan pension fund, report

  4. Institutions - Ontario pension fund leader calls all asset classes ‘expensive’, Taiwan's BLF plans $2bn in alternative mandates[more]

    Ontario pension fund leader calls all asset classes ‘expensive’ From WSJ.com: The head of one of the world’s largest pension funds said that across asset classes, “everything is expensive.” Ron Mock, who leads Canada’s $141 billion Ontario Teachers’ Pension Plan, said that the plan would

  5. Opalesque Exclusive: Ex-Citi trader launches 'sleep-at-night’ long/short equity fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: After working at Citi's proprietary trading desk, managing a large portfolio between 2008 and 2011, Joel S. Salomon founded SalauMor Management in New York