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Global alternative assets reach 15.3 trillion by 2020

Posted on 18 August 2015 by VRS  |  Email |Print

Worldwide assets under management (AuM) will hit $101.7 trillion by 2020, of which the alternative asset market is set to take up an increasing share, growing to between $13.6 trillion and $15.3 trillion. As part of their remit to citizens, sovereign wealth funds (SWF) and public pension reserve funds (PPRF) will need to continue to seek high levels of transparency.
Regionally the number of sovereign investments funds is set to rise, from the 125 today to 146 by 2020, with particularly the Asia-Pacific region adding funds. Sovereign wealth funds are expected to, depending on their objectives, invest part of their wider funds into the alternative market. According to the research, sovereign investors with capital maximisation objectives will search for higher alpha and diversification, lifting their alternatives portfolio to 14% in 2020 with the majority invested in real estate (41%) followed by private equity (38%)………………………………………..Full Article: Source

Surge in European M&A shows SWF firepower

Posted on 13 August 2015 by VRS  |  Email |Print

European takeover activity involving sovereign wealth funds more than tripled in the first half of 2015, amid signs that such funds’ greater firepower may be pushing up deal valuations. The 16 acquisitions by sovereign wealth funds in Europe in the first half of the year were worth an aggregate €13.9 billion, according to data provider Mergermarket, compared with a combined €3.4 billion across 15 deals in the same period last year.
Some of the world’s largest sovereign funds – including Government of Singapore Investment Corp and the Abu Dhabi Investment Authority – were part of a consortium in May that agreed to buy a 32.98% stake in telecommunications company Hutchison 3G UK for €4.2 billion – the largest private equity deal in Europe in the first six months of the year………………………………………..Full Article: Source

The major role of sovereign investors in the global economy: A European perspective

Posted on 30 July 2015 by VRS  |  Email |Print

The global economy has witnessed the emergence of a new set of key actors over the last two decades. Sovereign Wealth Funds (SWFs) and Pension Funds (PFs) – or Sovereign Investors – have become pivotal players in global financial markets thanks to their liquidity, and continue to grow rapidly in number and in size. This group of highly heterogeneous funds has different backgrounds, structures, and missions, but shares an ultimate goal: to preserve capital and maximize the return on investments.
While the economic crisis and subsequent cash constraints in developed economies quickly brought these investors to the forefront, the global economic recovery is intensifying the competition for high returns. The Asset Management industry is expecting a number of fundamental shifts; hence the way many asset managers operate in 2020 will be significantly different from the current model (PwC 2014)………………………………………..Full Article: Source

Sovereign Funds: 3 Portfolio Moves They Are Contemplating

Posted on 28 July 2015 by VRS  |  Email |Print

Sovereign wealth funds like the Abu Dhabi Investment Council (ADIC) and GIC Private Limited often take tactical bets while maintaining their long-term investment views. For example, GIC is an investor in Mumbai-based Eros International Plc, an Indian moviemaker – betting on India’s growing consumer class. These institutional investors understand that risk is the price all investors must pay to achieve returns.
From the start of 2015 till July 16, 2015, the Nikkei 225 returned 18.05% versus the S&P500 (similar period) returning 3.48%………………………………………..Full Article: Source

The world’s biggest sovereign wealth funds

Posted on 20 July 2015 by VRS  |  Email |Print

When it comes to sovereign wealth funds—state-owned investment vehicles—those countries that can afford to squirrel away surplus revenues do. As of March 2015, sovereign wealth funds around the world had amassed $7.1 trillion in assets under management, according to the Sovereign Wealth Fund Institute (SWFI), up from $3.4 trillion at the start of 2008.
Funds invest in a range of financial assets, from stocks and bonds to real estate and precious metals, but all have an objective to maximize the long-term return from their investments. Of total assets around the world, $4.29 trillion came from oil and gas sovereign wealth funds, which are funded by revenues from energy exports………………………………………..Full Article: Source

Temasek Holdings Global Portfolio Reaches Record US$194 Billion

Posted on 09 July 2015 by VRS  |  Email |Print

Singapore state investment giant Temasek Holdings said Tuesday its global portfolio reached a record S$266 billion (US$194 billion) in the year to March, driven by rise in global equities. The value of its holdings increased 19 percent from the previous fiscal year’s S$223 billion and is more than double its portfolio of S$103 billion 10 years ago, the company said in its annual report.
Net profit was S$14.5 billion from S$10.9 billion last year, said Temasek, one of the world’s biggest state-linked investment vehicles whose whose holdings include top global brands such as banking firm Standard Chartered, Singapore Airlines and Spanish energy giant Repsol………………………………………..Full Article: Source

Temasek Holdings’ 2015 Review: The Highlights

Posted on 09 July 2015 by VRS  |  Email |Print

Temasek Holdings, the sovereign wealth fund of Singapore, announced its annual review yesterday. For those who are unfamiliar, Temasek Holdings is one of the largest shareholders of many Singapore-listed companies; this alone might make the fund’s review worth noting for stock market investors in Singapore.
Some of the largest listed companies in Singapore, such as DBS Group Holdings Ltd, Singapore Telecommunications Limited, Starhub Ltd, Keppel Corporation Limited, Sembcorp Industries Limited, and Olam International Ltd all count Temasek Holdings as one of their major shareholders………………………………………..Full Article: Source

Sovereign wealth funds are likely to be the main driver of growth in alternative assets

Posted on 01 July 2015 by VRS  |  Email |Print

Investments in alternative asset classes will reach $15.3 trillion by 2020, driven by demand from emerging sovereign wealth fund investors, PricewaterhouseCoopers (PwC) has predicted. Its report—“Alternative Asset Management in 2020: Fast Forward to Centre Stage” —said demand for sustainable long-term returns would drive more investors away from mainstream equity and fixed-income investments.
The growth would mean assets in the alternatives space doubling in five years—Preqin’s latest data from January 2015 showed $7 trillion invested across hedge funds, private equity, venture capital, private real estate, and infrastructure. Sovereign wealth funds in the Middle East have seen their assets swell despite falling commodity prices, and have hiked up their investments in real estate and infrastructure………………………………………..Full Article: Source

UAE, Saudi sovereign wealth funds among world’s largest

Posted on 01 July 2015 by VRS  |  Email |Print

Sovereign wealth funds (SWF) in the GCC are among the world’s largest, with the United Arab Emirates and Saudi Arabia leading the way in second and third place, respectively, just behind Norway. The Scandinavian country’s Government Pension Fund currently holds the world’s largest sovereign wealth fund with $882 billion in assets, according to SWF Institute’s the latest rankings.
The UAE’s Abu Dhabi Investment Authority (ADIA) is estimated to hold $773 billion worth of assets. The kingdom’s Foreign Holdings, which is controlled by the Saudi Arabian Monetary Agency (SAMA), has assets valued at $757.2 billion, followed by Kuwait Investment Authority (KIA) at $548 billion………………………………………..Full Article: Source

These are the world’s top 10 largest sovereign wealth funds

Posted on 26 June 2015 by VRS  |  Email |Print

Number 1? Norway’s Government Pension Fund - Global with $882bn worth of assets. Be it China or Qatar, the world’s sovereign wealth funds are snapping up British assets every other day. But which are the world’s top 10 largest sovereign wealth funds? Take a look at this list by Sovereign Wealth Fund Institute.
1. Government Pension Fund - Global. Country: Norway Assets: $882bn Inception: 1990. 2. Abu Dhabi Investment Authority. Country: UAE – Abu Dhabi Assets: $773bn Inception: 1976. 3. SAMA Foreign Holdings Country: Saudi Arabia Assets: $757.2bn Inception: n/a……………………………………….Full Article: Source

The state pension fund as a sovereign wealth fund

Posted on 25 June 2015 by VRS  |  Email |Print

Sovereign wealth funds have been very holistic in their approach to strategic asset allocation. These funds think about the true risks for their clients (citizens) which is associated with the consumption and revenue pattern of their country. They truly have to think about portfolios that can weather ‘bad times” or market downturns because they are investing their country’s wealth.
They have to account for demographics and the depletion of resources. There are a few states that have the same mandate as a sovereign wealth fund given revenues from natural resource extraction like Alaska, New Mexico, Texas, North Dakota, and Louisiana. These funds have to think about resource prices, cash flows, and how to make the money last over the long-term long even after the resources have been used………………………………………..Full Article: Source

Current trends among GCC sovereign wealth funds

Posted on 24 June 2015 by VRS  |  Email |Print

Swelled by oil revenues the region’s sovereign wealth funds remain among the biggest players in the asset management sector despite the recent drop off in oil prices. Mena Fund Manager looks at current trends among the state-owned funds. The sovereign wealth fund (SWF) sector has continued to grow in recent years. With coffers swelled by commodity revenues, the funds have branched out into new asset classes and sought out new investment opportunities.
London lobbying group TheCityUK said SWF assets had grown to $7.1trn during 2014 in its latest survey of the sector. It remains small in comparison with the global mutual, pension and insurance fund sectors, but a significant sector nonetheless………………………………………..Full Article: Source

Sovereign Wealth: Moving the market

Posted on 23 June 2015 by VRS  |  Email |Print

Due to their size, sovereign wealth funds are ideally suited to infrastructure investment. And they have been making their mark. Sovereign wealth funds are making greater inroads into infrastructure investment. Data compiled by Preqin and released last month suggests infrastructure is the most popular of all alternative investment routes for SWFs, with 60% preferring infrastructure as demand grows for capital to finance long-term projects.
“As larger SWFs expand their exposure, we can expect (them) to become an even more important source of capital in the infrastructure market,” says Oliver Senchal, senior commercial analyst at Preqin. “While many of these investors acquire assets directly, many SWFs also access infrastructure through private funds.”……………………………………….Full Article: Source

The investment elephant in the room

Posted on 22 June 2015 by VRS  |  Email |Print

Central banks and sovereign wealth funds are one of the most significant investor groups in global financial markets today — rivaling institutional investors like pension funds and sovereign wealth funds as to their size. Central banks alone (excluding sovereign wealth funds) manage around US$12 trillion of assets — a decent amount of money by anyone’s standards.
The amount of reserves under management has grown dramatically over the course of the last quarter century and of course much of the increase in sovereign reserve accumulation has taken place in Asian economies. Sovereign reserves are the “elephant in the room” for financial markets — a large, powerful bloc of funds that has the potential to influence various financial markets………………………………………..Full Article: Source

Sovereign wealth funds turn to internal fund management

Posted on 11 June 2015 by VRS  |  Email |Print

Sovereign wealth funds are relying more on in-house expertise to manage their funds in a drive to bring down costs and improve performance in the low-yield environment, according to a report by Invesco Asset Management released on Wednesday. Although falling oil revenues have dampened inflows into sovereign wealth funds (SWFs) in the Middle East and elsewhere, the sector is still a huge pool of capital.
So sovereign funds’ increasing reliance on their own fund teams is significant for investment banks and asset managers, who have courted SWFs in recent years as other areas of finance suffered in the aftermath of the global financial crisis………………………………………..Full Article: Source

TheCityUK release Sovereign Wealth Funds 2015 report

Posted on 10 June 2015 by VRS  |  Email |Print

TheCityUK’s Sovereign Wealth Funds 2015 report, published this week, shows that Sovereign Wealth Funds (SWF) have increased their presence in the UK, making it the global leader for direct SWF investments as well as the leading Western centre for the management of SWFs.
While the UK and US each accounted for around 16 per cent of the $800 billion invested by SWFs since 2007, in relation to the size of its economy, the UK attracted over five times more investment than the US. According to the report, global assets under management of SWFs increased by 16 per cent in 2014 to a record $7.1 trillion, with direct investments of SWFs amounting to $117 billion – the second highest annual amount invested on record………………………………………..Full Article: Source

Oil Price Drop Hitting Sovereign Funds: Invesco Study

Posted on 09 June 2015 by VRS  |  Email |Print

A study released Monday by Invesco shows that North American sovereign wealth funds have been hardest hit by the steep drop in energy prices. While sovereign funds in the U.S. and Canada were set up thanks to state surpluses in commodity-rich regions, “the timing of the fall in the oil price has been particularly challenging for state governments” in North America, the report says.
In fact, 80% of North American sovereign investors expect funding to be reduced vs. 42% for oil-funded sovereigns in the rest of the world. Still, North American sovereigns indicate that they are confident their assets are protected from the government. In contract, 67% of sovereigns in countries outside North America with a high dependency on oil expect withdrawals if oil prices remain below U.S. $40 per barrel for two years, according to the research. (Oil traded near $63 on Monday.)……………………………………….Full Article: Source

Sovereign Wealth Funds: The Next 10 Years

Posted on 03 June 2015 by VRS  |  Email |Print

Ten years ago, I penned an article (see reprinted text here) in which I examined the phenomenon of large and increasingly active government-owned investment funds. While many of them had existed for decades, there was literally nothing available in the academic or practitioner literature on this phenomenon – not even an agreed term! So after some deliberation, I chose to call them “Sovereign Wealth Funds”.
The timing of my article was opportune, in that the pace of activity in this particular segment was picking up dramatically, and the new name – and especially its 3-letter acronym SWF – seemed to fill a need: new funds were being set up all over the world, assets under management were growing fast, and increasingly the role these institutions were playing in markets was being studied and discussed by policymakers, academics and market practitioners alike………………………………………..Full Article: Source

Sovereign wealth transparency, of sorts

Posted on 03 June 2015 by VRS  |  Email |Print

The annual report for the Abu Dhabi Investment Authority is out. Want to know how to invest like a sovereign wealth fund? Read on, but anyone interested in actual numbers best brace for disappointment.
The report will tell you broadly how Adia invests, but not in what, or how much. It has been doing so since 1976, and has made about 8 per cent a year over the last 30 years, broadly what you would expect for a big pension fund………………………………………..Full Article: Source

Putting aside billions – Africa’s sovereign wealth funds

Posted on 27 May 2015 by VRS  |  Email |Print

Sovereign wealth funds are sprouting across Africa – 15 countries have created funds in the last 20 years, managing a total of $159bn at the end of September 2014. Angola, Nigeria, Senegal and Ghana all started funds in the last 3 years and and funds are discussed, expected or being born in: Kenya, Liberia, Mauritius, Mozambique, Namibia, Niger, Uganda, Sierra Leone, South Sudan, Tanzania, Uganda, Zambia and Zimbabwe.
A key research event at Chatham House in September 2014 identified some principles of African SWF Demand, Development and Delivery. Funds with strict rules should limit politicians’ discretion and they can ensure that money is earmarked for public investments. For instance Ghana has a rule that oil revenues must fund “development-related expenditures”. In many cases this funding can be done through the governments’ budget and oversight systems, which otherwise funds might undermine and bypass………………………………….Full Article: Source

Total Assets Of Sovereign Wealth Funds Doubled Since 2008

Posted on 18 May 2015 by VRS  |  Email |Print

Preqin’s May 2015 Private Equity Spotlight focuses on sovereign wealth funds’ increasing investment in private equity. The article highlights both the growth in sovereign wealth funds and the increasing percentage of their portfolios being committed to alternative investments including private equity.
According to the article, “Today, the total assets of sovereign wealth funds top $6.31 tn, more than double the capital these entities represented in 2008, the year Preqin launched its first Sovereign Wealth Fund Review.” The Preqin article highlights that since October 2013, SWFs have increased their assets by $900 billion despite slumping commodity and oil prices throughout 2014. The continued growth in assets of sovereign wealth funds has been fueled by more government funding and reserves as well as from investment returns………………………………………..Full Article: Source

SWFI Trend Report: A Tale of Two Europes

Posted on 11 May 2015 by VRS  |  Email |Print

Sovereign wealth funds and large public institutional investors have chosen to invest a clear majority of their capital directly into the United Kingdom in the last twelve months from March 31, 2015. The UK takes the top position in Europe for inbound direct investment by public institutional investors, totaling US$ 28.4 billion in the Sovereign Wealth Fund Transaction Database.
Primarily looking at sovereign wealth funds for the same 12-month period, US$ 21.1 billion was invested in the UK. Specifically, sovereign funds have been drawn to institutional-quality real estate in London and other metropolitan areas. When thinking about sovereign funds investing in London properties, many professionals highlight the Qatar Investment Authority – Canary Wharf transaction. Yet, there is a property deal that didn’t receive ample coverage from financial media back in August 2014………………………………………..Full Article: Source

Sovereign wealth funds now big players in real estate

Posted on 08 May 2015 by VRS  |  Email |Print

45% of sovereign wealth funds active in real estate currently invest less than 5% of their total assets in the asset class.However, all sovereign wealth funds globally have a target allocation of 5% or more to real estate. This suggests that there is potential for significant inflows into real estate as these sovereign wealth funds invest to move towards their strategic targets, particularly as these investors seek ever more globally diversified portfolios.
59% of sovereign wealth funds globally actively invest in real estate, up from 54% as of 2013. This is only one percentage point behind infrastructure, which is the preferred alternative asset class for this group of investors. Almost two-thirds (64%) of sovereign wealth funds look to invest through private real estate fund investments, compared to 86% that seek direct investments in real estate assets. Notable sovereign wealth funds that invest in real estate include the Norway-based Government Pension Fund Global and the United Arab Emirates-based Abu Dhabi Investment Authority. (Press Release)

5 Key Takeaways at SWFI’s Institute Fund Summit Asia in Seoul

Posted on 05 May 2015 by VRS  |  Email |Print

In late April, the Sovereign Wealth Fund Institute (SWFI) held its third Asia summit this time in Seoul, Korea - a vibrant metropolis home to global companies such as Samsung, Hyundai and Lotte. South Korea’s rise to an economic powerhouse is fascinating. In 1957, South Korea and Ghana had nearly the same annual per capital global domestic product. Today, their stories couldn’t be more different.
Walking down the busy streets of Seoul and districts such as the glitzy Gangnam section, Korea has become a model for emerging economies in general, and Asian economies specifically. With prosperity in exports and domestic consumption, Asian companies are expanding market share. Eric Moffett who manages money at T. Rowe Price made the case that Asian companies and their earnings are exposed to rising incomes in parts of Asia………………………………………..Full Article: Source

World’s Largest Sovereign Wealth Funds (Video)

Posted on 29 April 2015 by VRS  |  Email |Print

With investments worth more than many countries GDPs - the world’s largest sovereign wealth funds are a force to be reckoned with. The biggest got their cash from oil. The funds are often secretive and difficult to scale. Bloomberg checks out the world’s five largest sovereign wealth funds.……………………………………….Full Article: Source

What’s Behind Qatar’s $2.3 Billion Bet on Shell’s BG Takeover?

Posted on 28 April 2015 by VRS  |  Email |Print

The Qatar Investment Authority amassed major positions in both Royal Dutch Shell and BG Group after the two companies agreed to merge earlier this month. What’s its game? The oil and gas industry is primed for an M&A boom. And on April 8, Royal Dutch Shell announced it was offering to buy Reading, U.K.-based BG Group, the former exploration and production arm of British Gas, in a deal worth British Pound 47 billion ($70.2 billion).
Sovereign wealth funds’ responses to the proposed deal in the week following the announcement were largely ignored by the media. Norges Bank Investment Management , the arm of Norway’s central bank that manages the $861 billion Government Pension Fund Global, added BG shares to its portfolio, which also includes a 5 percent stake in Shell. Qatar Investment Authority bought 67 million shares in Shell (a 2.75 percent stake) and 12 million in BG (a 0.39 percent stake) in the wake of the deal. The total cost? $2.3 billion — big money even for the Qataris………………………………………..Full Article: Source

Can Sovereign Wealth Funds Learn to Zig When Markets Zag?

Posted on 22 April 2015 by VRS  |  Email |Print

Sovereign Wealth Center’s transaction database (which excludes NBIM’s open-market stock trades that are part of its indexed strategies) backs Meert up. Sovereign wealth funds could be far better at investing countercyclically. An analysis of our investment data from 2005 to the first quarter of 2015 shows that there is a strong correlation between upward swings in the market cycle and sovereign funds’ increased willingness to take on risk — and vice versa.
This trend suggests that although these funds are supposed to invest for the long term and theoretically be indifferent to cyclical market movements. Instead, they tend to follow trends like other investors — piling in as markets rise and selling when they tumble. That’s a surefire recipe for underperformance…………………………………..Full Article: Source

Down Under, SWFs Compete for Hard Assets Amid Rising Prices

Posted on 16 April 2015 by VRS  |  Email |Print

Across Australia, sovereign wealth funds are buying up real estate and infrastructure, hoping to profit from favorable long-term demographic trends. But as prices rise and competition heats up, is the window of opportunity closing? On March 27, voters in New South Wales, Australia, returned right-wing Liberal politician Mike Baird to power as state premier at the head of a coalition government with the countryside-focused National Party.
Baird’s watchword throughout a bruising election campaign was “poles and wires” — he pledged to privatize the state’s electricity grid to raise money for an ambitious spending program to improve roads, schools and hospitals. As the opposition Australian Labor Party was against privatization, the election was considered a referendum on the sell-off — and the voters answered with a resounding yes………………………………………..Full Article: Source

SWF assets surge by Dh3.3trn in 18 months: What’s behind the boost?

Posted on 14 April 2015 by VRS  |  Email |Print

Despite a drop in oil prices over the last year, sovereign wealth fund (SWF) assets have grown nearly 17 per cent. Alternative assets industry data collector Preqin said SWF assets under management expanded by more than $900 billion (Dh3.3 trillion) over the past 18 months, from October 2013 to March 2015, reaching $6.31 trillion (Dh23.15 trillion) by the end of last month.
SWF assets stood at $5.38 trillion (Dh19.74 trillion) in October 2013. The recent boost to SWF assets has come mainly from continued funding from governments and reserves as well as from investment returns, Preqin said………………………………………..Full Article: Source

Preqin: Sovereign wealth fund assets rise 17% in 18 months to $6.3 trillion

Posted on 13 April 2015 by VRS  |  Email |Print

Aggregate assets managed by a universe of 73 sovereign wealth funds increased 17% to $6.3 trillion as of March 31, up from $5.4 trillion at the start of October 2013, the last time researcher Preqin reviewed this part of the asset owner industry.
The overall industry growth was due to continued funding from government sponsors of the funds and investment returns, said the Preqin report, which was released Thursday. A majority of sovereign wealth funds — 59% — experienced an increase in assets over the 18-month period, 11% had no change and 30% lost ground, the Preqin data showed………………………………………..Full Article: Source

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

Posted on 10 April 2015 by VRS  |  Email |Print

Assets under management for sovereign wealth funds globally reach $6.31tn as of March 2015, increasing by more than $900bn over the past 18 months. 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 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. 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………………………………………..Full Article: Source

Do sovereign wealth funds make sense for Africa?

Posted on 09 April 2015 by VRS  |  Email |Print

Sovereign wealth funds seem to be the new must-have accessory for African governments—especially those with freshly discovered oil and gas reserves. In the past three years Angola, Ghana and Nigeria have all set up funds. A string of other countries including Kenya, Liberia, Mozambique and Tanzania are planning to follow suit. But are these funds delivering? And do they make sense in an African context?
These days, everyone wants a sovereign wealth fund (SWF). “The label sovereign wealth fund sounds sexy. ‘Norway has one, Chile has one, Qatar has one, we want one too,’ is what we are hearing a lot” from African leaders, said Andrew Bauer, an economic analyst at the Natural Resource Governance Institute (NRGI), a New York-based NGO………………………………………..Full Article: Source

Promise and Pitfalls for Sovereign Wealth Funds

Posted on 09 April 2015 by VRS  |  Email |Print

Sovereign wealth funds are turning to smart beta strategies to boost returns and lower volatility. Here’s what managers should know about the potential and perils for the popular strategy. Enhanced indexes, alternative beta, strategic beta, or factor-based investing. Whatever the term of art, smart beta is drawing sovereign wealth funds and other institutions.
MSCI, the New York-based index and research firm, estimates assets devoted to such strategies have risen from $20 billion just five years ago to $500 billion today. The word “bubble” springs to mind. Relax — but not too much. Smart beta, after all, is not an asset class, like the internet stocks of 2000 or subprime real estate in 2008………………………………………..Full Article: Source

Are Sovereign Wealth Funds Becoming Guarantors?

Posted on 08 April 2015 by VRS  |  Email |Print

Although sovereign wealth funds only became a major global financial factor 25 years ago, they are rapidly becoming the centerpiece of world monetary liquidity, utilized by 15 global governments fortunate enough to have accumulated excess cash, after meeting all budgetary monetary requirements. It’s estimated that these government-directed wealth centers comprise $7 trillion of the world’s total excess monetary capability of $28 trillion.
Still a leading factor, with close to a trillion dollars in reserve, Norway made this government-directed super-investment vehicle famous as a stockpile for that diminutive (5 million population) Scandinavian nation’s proceeds from North Sea oil and gas………………………………………..Full Article: Source

At SWFs, 2015 Is Shaping Up to Be A High Turnover Year for Management

Posted on 27 March 2015 by VRS  |  Email |Print

It’s been a busy year for sovereign wealth fund executives. We’ve seen a shake-up at the top of the China Investment Corp.(CIC), the launch of an entirely new fund in Mexico, and new hires at Australia’s Future Fund and Khazanah Nasional, among others. And a momentous change of leadership at Alberta Investment Management Corp. Here’s a roundup of all the moves from the first quarter 2015.
On February 25, the People’s Bank of China (PBoC), the country’s central bank, appointed Fan Yifei, CIC’s executive vice president, deputy chief operating officer and executive committee member, as its new vice chairman; he will now divide his time between the two institutions, an unusual arrangement whose implications China experts are still trying to decipher………………………………………..Full Article: Source

Do Sovereign Fund Direct Private Investments Deliver Value?

Posted on 25 March 2015 by VRS  |  Email |Print

As sovereign funds boost direct private equity and venture capital investment, new research suggests that they may be missing out on returns. In a recent long-term study, sovereign wealth funds’ and other institutions’ direct investments in venture capital.
Alaska Permanent Fund Corp. made direct investments totaling $128.5 million in Juno, and now its 28 percent stake is worth $1.5 billion. The allocation was a “real home run,” says APFC chief executive Michael Burns. “We’re really proud of it, but it does distort our direct investment performance, as it wasn’t the norm.” Sovereign wealth funds’ ability to deploy large amounts of capital, combined with their long-term horizons and lack of liabilities, makes them natural candidates for private equity and venture capital investments, whether they allocate directly or through external managers………………………………………..Full Article: Source

Sovereign wealth funds: What does it take to succeed?

Posted on 25 March 2015 by VRS  |  Email |Print

Norway’s sovereign wealth fund, the country’s collective bank account now valued at $1 trillion and built from off-shore oil reserves, is often held up as a prime example of how such funds can succeed. The usual rule: make prudent investments, stick to them, be transparent and watch the money grow exponentially.
But Norway’s Government Pension Fund, as it is formally called, is only one of an estimated 80 or so sovereign wealth funds worldwide that collectively hold $7 trillion US. These others probably also hold lessons for how governments can save wisely for future generations. Lessons that might apply to Alberta’s Heritage Savings Trust Fund, which began in 1976 with the best of intentions, but seems to have stalled out at roughly $17.2 billion. But rating these sovereign wealth funds, it turns out, is a subjective affair………………………………………..Full Article: Source

Norway’s Sovereign Wealth Fund Holds Lessons For Canada

Posted on 24 March 2015 by VRS  |  Email |Print

In Stavanger, a quaint, seaside city on Norway’s coast, a local newspaper publishes a series called “The Oil Kids” that reports on the lifestyles of wealthy second-generation beneficiaries of Norway’s offshore oil riches. “If you compare to our parents or grandparents which built this country, I think we’re a little bit spoiled,” admits Bjorn Knudsen, whose father worked for a large North Sea oil company.
Fifty years ago, Stavanger’s biggest industry was canning herring. Now, this city is the country’s de facto oil capital. “We are extremely lucky,” says Bjorn’s wife, Kristin Alne, a production engineer for Det Norske Olijeselsksap, an offshore oil company………………………………………..Full Article: Source

Norway’s Government Pension Fund is on top of the world

Posted on 24 March 2015 by VRS  |  Email |Print

A glance at the largest sovereign wealth fund – Norway’s Government Pension Fund Global. GPF assets have grown an annualized 20.3% in the 10 years ended Dec. 31. The fund increased its real estate allocation to 2.2% of assets in 2014 and officials say they “will continue to expand the portfolio in the years ahead.”
In its annual report, management noted strong equity returns in recent years cannot be expected to continue. That, combined with low interest rates globally “will make it a challenge for the fund to deliver similarly high returns going forward.”……………………………………….Full Article: Source

Sovereign wealth funds start to leak oil

Posted on 23 March 2015 by VRS  |  Email |Print

Norway’s $850bn oil fund has performed a remarkable impression of the proverbial 800-pound gorilla in the past decade. It snapped up 1.3 per cent of the world’s equity market capitalisation and 0.9 per cent of the fixed income market, as well as dabbling in property, as its assets surged sevenfold.
So any substantial change to the fund, or to the wider $7.1tn sovereign wealth fund sector, matters to markets. With $4.3tn of that $7.1tn dependent on revenue streams from oil and gas, according to the Sovereign Wealth Fund Institute, a slump in the oil price from $115 a barrel in June 2014 to $57 now, might be regarded as constituting a material change………………………………………..Full Article: Source

Minerals-Backed SWFs Show Their Mettle as Coal, Copper Prices Plummet

Posted on 20 March 2015 by VRS  |  Email |Print

State-owned investors funded by mineral and metals mining revenue are suffering as prices fall. Fiscal prudence may see them through. As petroleum prices tumble, the world’s attention is focused on those sovereign wealth funds associated with hydrocarbons.
People are paying less heed to government-owned asset pools funded by revenue from nonoil commodities, such as metals, coal and diamonds. Prices for many of these exports have also declined over the past year, though less sharply than oil. Copper prices have fallen by 18 percent since crude started to tank last July, to their lowest value since mid-2009, according to NASDAQ data. Thermal coal has dropped 13 percent over the same period, and is also hovering near six-year lows, according to data provider InvestmentMine………………………………………..Full Article: Source

Sovereign wealth a major GCC asset

Posted on 17 March 2015 by VRS  |  Email |Print

Despite the sharp decline in oil prices, especially during the second half of 2014, the GCC countries own huge sovereign wealth. It is remarkable that the wealth of Gulf sovereign wealth funds increased during the course of the year. According to Sovereign Wealth Fund Institute, which monitors sovereign wealth, sovereign wealth funds have registered steady growth during the past few years.
Oil wealth accounts for around 60 percent of global sovereign wealth. Based on the institute’s statistics, the value of sovereign wealth at present is around $7,111bn, rising from $7,057bn, $6,831bn, and $6,609bn in December, September, and June of 2014, respectively. This marks steady growth in the value of sovereign wealth during the oil price fall, which indicates investments outside the oil sector………………………………………..Full Article: Source

Gulf sovereign wealth funds punching above their weight

Posted on 17 March 2015 by VRS  |  Email |Print

According to the Sovereign Wealth Fund (SWF) Institute, GCC-based SWFs have a total of $2.6 trillion (Dh9.54 trillion) in assets — about 37 per cent of total SWF assets worldwide. Close to 80 per cent of SWF assets in GCC states are accounted for by three major players — the Abu Dhabi Investment Authority with $773 billion, foreign holdings at the Saudi Arabia Monetary Authority (SAMA) at $757 billion and the Kuwait Investment Authority with $548 billion. By assets, Adia and Sama are the second and third largest SWFs globally.
The UAE has seven large SWFs in total: four in Abu Dhabi, one each in Dubai and Ras Al Khaimah, while the last is a federal fund. By number of funds, this is more than any other country in the GCC and globally, second only to the US which has several smaller-sized state-level SWFs………………………………………..Full Article: Source

In European Infrastructure Boom, SWFs Navigate Minefields

Posted on 12 March 2015 by VRS  |  Email |Print

Across Europe, sovereign wealth funds are financing much-needed infrastructure projects — and realizing big profits. But shifting regulations pose risks. In Spain, a huge infrastructure deal is close to completion. New York investment bank Morgan Stanley has put its Madrid-based natural gas distribution company Madrilena Red de Gas on the market for around euro1.8 billion ($2 billion) — and demand is off the charts.
Three separate investor groups are reportedly battling for the assets, with two sovereign wealth funds in the fray: the Abu Dhabi Investment Authority (ADIA) and Gingko Tree Investment, a unit of China’s State Administration of Foreign Exchange (SAFE)………………………………………..Full Article: Source

Are Sovereign Wealth Funds Key to Global Economic Recovery?

Posted on 11 March 2015 by VRS  |  Email |Print

Sovereign wealth funds, a multiplicity of aggregate financial world investment groupings and investing opportunities comprise the huge amounts of excess monetary liquidity that have aggregated worldwide. While some are sponsored and/or backed by indigenous governments, they are primarily managed by financial experts, who constantly scan global tangible and intangible objectives, wherever they might exist.
While the U.S., the United Kingdom, and Germany have their large well-known investment institutions like Goldman-Sachs, the Carlyle Group, KKR, and Apollo Management, similar cash-rich nations have relied on these sophisticated sovereign wealth institutions to invest their share of the increasing liquidity that is coalescing in many developing, and even smaller developed world national entities………………………………………..Full Article: Source

International Review of Law publishes a special issue on Sovereign Wealth Funds

Posted on 10 March 2015 by VRS  |  Email |Print

International Review of Law Journal (IRL), has published a special issue on Sovereign Wealth Funds dedicated to the exploration of emerging global legal sovereign wealth funds (SWFs). The IRL journal, published on the QScience.com online publishing platform of Bloomsbury Qatar Foundation Journals (BQFJ), is accessible to all with free to read articles.
With Sovereign Wealth Funds increasingly demonstrating their global appeal, the need to understand legal and regulatory issues has been the stimulus to publish the document. IRL SWF investments are now being felt far and wide in virtually all international investment markets as well as through SWFs’ ambitious private investments in finance, real estate, agriculture, energy exploration, transportation, infrastructure development and technology………………………………………..Full Article: Source

The Rise of Asian Sovereign Wealth Funds

Posted on 09 March 2015 by VRS  |  Email |Print

Spurred by the region’s rapid economic development, sovereign wealth funds in Asia have increased in both size and number over the past decade. These funds have become large and active participants in global financial markets and they frequently make high-profile foreign investments. Given their size and close links to governments, sovereign wealth fund investments often attract media attention and are scrutinized for political motivations.
The perception that many Asian sovereign wealth funds are not transparent in their activities and investments has also raised concerns. This Asia Focus provides an overview of sovereign wealth funds, evaluates the structure and activities of major funds in Asia, and compares the transparency of Asian funds relative to international best practices………………………………………..Full Article: Source

Sovereign Wealth Fund Direct Infrastructure Investments, 2003-2014

Posted on 26 February 2015 by VRS  |  Email |Print

Sovereign wealth funds surpassed US$ 7 trillion in assets before the end of 2014. These institutional investors typically have unique liabilities compared to public pensions. Many of the large sovereign wealth funds, funds with over US$ 30 billion in assets, seek long-term investments. When it comes to infrastructure, sovereign wealth funds pursue accommodating investment regimes, low political risk, assurances from government and opportunities to earn stable financial returns.
According to our research, Asia and Europe top the list as the largest recipients of direct infrastructure investment by sovereign wealth funds, followed by Australia and New Zealand. The Americas ranks dead last, even behind Africa. Breaking apart the Americas, South America has few large direct infrastructure investments by sovereign funds, the bulk going to North America………………………………………..Full Article: Source

Sovereign Wealth Funds Investing at Home – Opportunity Fraught with Risk

Posted on 24 February 2015 by VRS  |  Email |Print

Following the recent discoveries of large oil and gas deposits in East Africa, a number of countries in the region are in the process of establishing, or are discussing the creation of, sovereign wealth funds (SWFs) as a means to stabilise the effect of volatile currency inflows and to save for future generations.
Additionally, like several other SWFs established over the last decade, some East African governments are considering a role for the planned funds in economic development, as strategic investors in the national economy. The use of SWFs as a tool for strategic domestic investments opens up a range of new possibilities for deepening undercapitalised domestic financial markets and crowding in private capital to infrastructure in priority sectors such as power and transport………………………………………..Full Article: Source

Russian Sovereign Wealth Funds: 2015 Drawdowns

Posted on 23 February 2015 by VRS  |  Email |Print

Back at the end of January, Russia’s sovereign wealth funds amounted to USD160 billion, with the government primarily taking a historically set approach (from 2003 onwards) of arms-length interactions with the funds’ management. This relative non-interference marked 2014 and is now set to be changed, with the government looking at using SWFs to provide some support for the investment that has been falling in the 2013-2014 period and is likely to fall even further this year.
Fixed investment in Russia fell 2.0% y/y in 2013, and by another 3.7% in 2014. Private investment is likely to fall by double digits in 2015, based on the cost of funding, lack of access to international funding and general recession in the economy. It is likely to stay in negative growth territory through 2016………………………………………..Full Article: Source

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