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Alternative Market Briefing

Sovereign wealth funds leverage hedge fund IT, administration for investments

Tuesday, November 06, 2012

Bailey McCann, Opalesque New York:

Sovereign wealth funds (SWFs) might be considered the ultimate in diversified investing. With an investment scope that ranges from the immediate to well into the future, SWFs make large and complex investments in order to create long-term value for their states. Historically, these funds have stayed out of the spotlight, but in recent years, their objectives, investments, and in some cases, their talent have stepped into view.

Two of the larger and perhaps flashier funds are the China Investment Corp. and Abu Dhabi Investment Authority. China’s SWF made news recently for taking a 10% stake in Heathrow Airport in the UK, a transaction that was widely reported. China investment Corp also maintains a stake in all four of the country’s biggest banks - Industrial & Commercial Bank of China Ltd. , Bank of China Ltd. , China Construction Bank Corp. and Agricultural Bank of China Ltd. Typically, investments that meet some sort of strategic imperative of the state will be backed by these funds, making for complex portfolios. As a result, many of these funds are leveraging the same technology as hedge funds to get a handle on their portfolios, risk, and reporting.

"Institutions are investing in increasingly complex asset classes, and need a solution that can handle a diverse array of assets and strategies, without sacrificing accuracy or ri......................

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