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Sovereign Wealth Funds Redemption Risk Overblown?

Posted on 25 November 2015 by VRS  |  Email |Print

The MS analysts begin by highlighting that both media reports and some management commentary have suggested that certain “petrodollar-related” sovereign wealth funds have been withdrawing billions of dollars from asset managers because of growing national deficits and to minimize exposure to volatile equity markets given much lower crude oil prices.
Cyprys et al. argue that these SWF redemption concerns are really overblown given that only 60% of SWF assets are held by oil-reliant economies, and, moreover, current fiscal pressures vary dramatically………………………………………..Full Article: Source

Khazanah Research to help clarify TPPA benefits, pitfalls

Posted on 17 November 2015 by VRS  |  Email |Print

Khazanah Nasional Bhd is among the key outfits helping to analyse various benefits and pitfalls for Malaysians with the nation’s participation in the Trans-Pacific Partnership Agreement (TPPA). “We hope the analyses would show in terms of what the benefits are and in terms of what the costs are and whether the benefits outweigh the costs,” said Khazanah Research Institute managing director Datuk Charon Mokhzani.
The highly publicised 12-country trade agreement has received both praises and criticisms in Malaysia and TPPA member nations, based on details leaked earlier and initial impressions after the full text was made public last week. “It’s a 6,000 page document and it’s very hard for us today to tell you what the overall impact (just yet). To be able to make a proper comment on this is too early. We need time to understand the document.”………………………………………Full Article: Source

Fears over sovereign wealth funds pulling assets overblown, Morgan Stanley says

Posted on 17 November 2015 by VRS  |  Email |Print

Fears that sovereign wealth funds would pull out of equity markets - say, as some countries tried to shore up their public finances in the face of lower oil prices - and the impact that might have on asset managers and banks were “overblown,” analysts at Morgan Stanley found.
Only 60% of SWF’s assets, totalling approximately $7tn (£4.64bn), are held by oil producing nations and the pressures on their state finances vary depending on the economy in question, they argued in a research report sent to clients. An “extreme” bear-case suggested potential earnings risk of 0.1-7.1% (average: 2.1%) if all SWFs redeemed all externally managed assets, the broker said……………………………………….Full Article: Source

SWF assets to decline further due low oil prices -Moody’s

Posted on 16 November 2015 by VRS  |  Email |Print

Sovereign wealth fund (SWF) assets will grow more slowly or even decline as governments are forced to tap funds to finance budget deficits resulting from persistently low oil prices, credit ratings agency Moody’s said on Thursday. The $4.5 trillion SWF industry has grown rapidly over the last decade but with 73 percent of SWF assets funded from oil and gas revenues, countries like Russia, Saudi Arabia and Norway have already begun tapping into their reserves.
These drawdowns have been prompted by a fall of over 50 percent in global oil prices, with Brent crude futures plunging from $115 a barrel in June 2014 to around $45 a barrel today. With the oil supply glut persisting, the situation is not expected to change soon………………………………………..Full Article: Source

Sovereign Wealth Funds Have Buffers Against Oil Shock: Moody’s

Posted on 16 November 2015 by VRS  |  Email |Print

As a November 12th report from Moody’s Investors Service highlights, both the number and the AUM of global sovereign wealth funds (SWFs) have grown rapidly over the last decade and change. Moreover, SWFs are becoming a crucial part of the international financial system, and were an important stabilizing force in the financial crisis a few years ago.
Finally, as Elena H. Duggar and the rest of the Moody’s team note: “SWFs facilitate the intergenerational transfer of proceeds from nonrenewable resources, allow for greater portfolio diversification than traditional central bank reserves, and contribute to exchange rate stability by managing excess inflows. SWFs also increasingly fund investments in infrastructure.”……………………………………….Full Article: Source

SWFs: Buddies or baddies?

Posted on 06 November 2015 by VRS  |  Email |Print

As it turns out, sovereigns don’t always win: many thought Malaysia’s Khazanah Nasional had a done deal when it offered €750 million for Globalvia last summer – only to see Spanish-based Bankia and FCC, current owners of the concessions business, sell the asset to Canada’s OPTrust, the Netherlands’ PGGM and the UK’s USS this week after the pensions matched the fund’s bid.
1MDB, another Malaysian state-backed fund, is divesting assets rather than hunting for them. It is now hoping to get about $3 billion for its energy unit. The institution’s troubles are largely down to gross mismanagement; it doesn’t help that $700 million have mysteriously disappeared from its coffers, with the Prime Minister accused of channelling the money to his personal accounts. Still, it shows that sovereigns sometimes have their own particular issues to deal with………………………………………..Full Article: Source

Sovereign wealth funds face a rainy day

Posted on 30 October 2015 by VRS  |  Email |Print

The 46 countries that have at least one sovereign wealth fund have largely set them up for a rainy day. Now that day has come for most of them. Commodity prices are so depressed that governments need to unseal their piggy banks and with profitable investment opportunities scarce there is little incentive not to. This could end up putting downward pressure on global financial markets.
Of the top 30 sovereign funds, 18 are filled with revenues from oil and gas. The largest of the funds, set up in 1990 to safeguard Norway’s oil wealth for future generations, posted its biggest loss in four years this week. It shed $32 billion in the third quarter, all in the stock market, which accounts for 60 percent of its investments………………………………………..Full Article: Source

Here’s what Temasek Holdings & GIC do with your money

Posted on 23 October 2015 by VRS  |  Email |Print

It’s high time someone talks about the elephant(s) in the room (Singapore) that has been the talk of this election and conspiracy theorists: Temasek Holdings and GIC. Sovereign wealth funds (SWFs) have been accused of having hidden agendas, being state economic weapons. At the same time, they’ve also been hailed as saviors, buoying up banks during the financial crisis when capital markets were frozen.
Singapore isn’t the only nation with a SWF; many other nations (mainly net exporters) that enjoy current account surpluses and hoard reserves have a SWF as well. SWFs manage vast amounts of money, also often seen as the true lender of last resort in its home country. The below table shows the world’s largest SWFs:……………………………………….Full Article: Source

UBS Sees Sovereign Assets Shrinking by $1.2 Trillion

Posted on 15 October 2015 by VRS  |  Email |Print

Central bank and sovereign wealth fund assets will shrink by $1.2 trillion, or almost 7 percent, by the end of the year as China and petrostates including Russia and Saudi Arabia dip into their savings amid slower growth and lower crude revenues, according to UBS Group AG.
The decline will be driven by China withdrawing its foreign exchange reserves, while oil-producing countries tap foreign assets to support government spending, Massimiliano Castelli, head of global strategy at UBS Asset Management, said in a phone interview from Zurich Tuesday………………………………………..Full Article: Source

Should markets fear the great sovereign wealth fund liquidation trade?

Posted on 14 October 2015 by VRS  |  Email |Print

After decades of investing billions in bonds, shares and hedge funds, sovereign wealth funds are turning into sellers and redeemers. They’re the largest and most secretive investors in the world, but after decades of investing billions in bonds, shares and hedge funds, these investors are now turning into sellers and redeemers.
Sovereign wealth funds, which control about $US7 trillion ($9.5 trillion) of assets largely created out their nation’s vast mineral riches, are drawing down on their financial wealth as resources decline, creating a potentially vicious feedback loop for financial markets. Last month the Financial Times reported Saudi Arabia’s sovereign fund, SAMA, had declined by $US73 billion, hitting several funds with large redemptions, as the fourth-largest sovereign fund shrunk by one-tenth………………………………………..Full Article: Source

A Key Argument Against Sovereign Funds Spending More is Evaporating

Posted on 13 October 2015 by VRS  |  Email |Print

According to the Sovereign Wealth Fund Transaction Database(SWFTD), which tracks direct sovereign fund and pension transactions, wealth funds in the first half of 2015 invested more capital compared to the first half of 2014. In the initial six months of 2015, sovereign funds invested directly US$ 63.4 billion versus 2014’s comparable period figure of US$ 51.9 billion.
In the first half of 2013, these institutional investors directly invested US$ 44.6 billion. Clearly, this shows sovereign funds investing larger amounts of capital directly, despite global low oil prices, a slowdown in China’s economy and price weakness in other global commodities. Some wealth fund target sectors have witnessed noticeable growth. Healthcare investing has become a popular theme for sovereign investors………………………………………..Full Article: Source

Sovereign funds double deal value

Posted on 05 October 2015 by VRS  |  Email |Print

Sovereign wealth funds spent a total of US$24.9 billion (S$35.6 billion) on overseas acquisitions in the third quarter of 2015, almost double the previous quarter as they chased after trophy assets. Thomson Reuters data shows that these funds, which invest windfall revenues from oil and other commodity exports for future generations, were involved in 28 deals in the July-September period, down 10 from the previous quarter.
Singapore’s investment funds GIC and Temasek were part of separate consortiums that featured in the top two deals in that quarter. Total value is still shy of the US$30.6 billion peak reached in the last quarter of last year, when sovereign funds were buying up assets at their fastest rate since the financial crisis………………………………………..Full Article: Source

Sovereign wealth funds double deal volumes to $24.9 bln in Q3

Posted on 02 October 2015 by VRS  |  Email |Print

Sovereign wealth funds spent a total of $24.9 billion on overseas acquisitions during the third quarter of 2015, almost double the previous quarter as they chased after trophy assets. Thomson Reuters data shows that sovereign wealth funds, which invest windfall revenues from oil and other commodity exports for future generations, were involved in 28 deals during the July-September period, down 10 from the previous quarter.
Deal volumes are still shy of the $30.6 billion peak reached in the last quarter of 2014, when sovereign funds were buying up assets at their fastest rate since the financial crisis. But it marks a significant rebound from the first quarter when deal value slipped to $5.4 billion for 32 transactions………………………………………..Full Article: Source

Market upheaval forcing many sovereign-wealth funds to adapt

Posted on 30 September 2015 by VRS  |  Email |Print

As representatives of dozens of the world’s sovereign-wealth funds gather at Milan’s posh Hotel Principe di Savoia this week for their annual conference, they will have more than networking on their minds. The ending of a commodities bull market and the uncertainty created by China’s economic slowdown have prompted the massive funds to reassess a fast-changing global landscape.
Assets managed by sovereign-wealth funds grew more than 20% annually between 2011 and 2014, in large part because of higher oil prices. But with oil falling lately—and, perhaps, poised to fall further—experts say the funds will be forced not only to review their investments but also take on greater risk to sustain yields………………………………………..Full Article: Source

Has The Qatar Investment Authority Really Lost $12 Billion?

Posted on 30 September 2015 by VRS  |  Email |Print

The Financial Times splashed with an article saying that the Qatar sovereign wealth fund, the Qatar Investment Authority, had suffered a $12 billion paper loss in the third quarter of 2015. It’s a big claim. But is it right?
The QIA does not publish accounts, so we don’t truly know either what its total holdings are, or what it owns, or how it is performing. So the FT has reached its conclusion by looking at the performance of assets where QIA’s ownership is publicly known, and has crunched the numbers on Blooomberg compilations of regulatory filings………………………………………..Full Article: Source

Mideast sovereign wealth funds ready for challenges

Posted on 28 September 2015 by VRS  |  Email |Print

The plunge in oil prices is expected to reduce funding and increase withdrawal risk, but Middle East sovereigns, which control more than one-fourth of the $7.09 trillion global sovereign wealth funds, or SWFs, are now better-placed to manage these challenges than in the past.
Established Middle East sovereigns have concerns over withdrawal and funding risk but also feel they are better placed to cope with the challenges than before the global financial crisis, investment management firm Invesco said in a recent study. Nick Tolchard, head of Invesco Middle East, said emerging-market infrastructure is a key sub-asset class for established Middle East sovereigns and they are keen to expand sovereign and private sector relationships to ensure access to attractive deals………………………………………..Full Article: Source

Sovereign funds wake up to fiscal reality

Posted on 22 September 2015 by VRS  |  Email |Print

Unlike men, diamonds linger, Dame Shirley Bassey sang. For more than 20 years Botswana has maintained an insurance policy just in case. The country, a major producer, invests export earnings through its Pula sovereign wealth fund, turning finite resources into permanent financial income. Even though they are often seen as mysterious players in many markets, with powers to buy and sell vast quantities of US Treasuries, or to invest heavily in private equity, this is a basic fiscal role for sovereign funds.
“The general view for many is about investment, and the return on investment,” says Dr Khalid Alsweilem, the former head of the Saudi Arabian Monetary Agency’s investments portfolio. “But the importance of a sovereign wealth fund is being a cornerstone of a fiscal framework.”……………………………………….Full Article: Source

Time to review sovereign investment funds

Posted on 17 September 2015 by VRS  |  Email |Print

Now is the time for policymakers to review their sovereign investment funds and question whether different objectives could be beneficial for their economy. Since the financial crisis, sovereign investors have become an increasingly important feature of the global economy. For example, the total global assets Sovereign Wealth Funds manage increased from around US$3 trillion at the end of 2008 to just over US$6 trillion in March 2015.
Over this time, the global economy has changed with knock-on effects on SIs, say PwC economists: Moving on from the crisis: The economic downturn had a significant impact on some SIs which had to provide funding to their governments or prop up domestic financial sectors. For example, Ireland’s National Pensions Reserve Fund was initially set up to fund future pension payments, but during the crisis, a large chunk of its assets were used to bailout the banks………………………………………..Full Article: Source

The Role Of Sovereign Wealth Funds As Activist Or Passive Fund Managers

Posted on 16 September 2015 by VRS  |  Email |Print

Sovereign Wealth Funds (SWF) have attracted a lot media attention with recent investments in publicly listed companies. Repeatedly, concerns have been raised, such as the fear of industrial espionage or geopolitical threats. We analyze whether SWF managers acquire stakes in foreign publicly listed firms 1) to play an active role which would support concerns or 2) passively select investments to increase the portfolio diversification, for instance.
We find that SWF target firms are more profitable, pay higher dividends and have a higher financial stability than their industry peers. This is in line with SWF managers passively seeking for further portfolio diversification in foreign public equity markets. We cannot find an improvement in operating or market performance after the engagement of SWF……………………………………….Full Article: Source

The Triple Threat Facing Sovereign Wealth Funds

Posted on 10 September 2015 by VRS  |  Email |Print

From the Mendenhall Glacier in Juneau to Prudhoe Bay above the Arctic Circle, Alaskans by the thousands will soon tear open crisp white envelopes containing the dividend checks they receive each year from the Alaska Department of Revenue Permanent Fund Dividend Division, which doles out money from the state’s $52.8 billion sovereign wealth fund.
They may be happily surprised. Despite the 60 percent drop in crude prices since June 2014, each oil-fueled check should top $2,000, by our estimates. That’s up from the $1,884 each of Alaska’s approved recipients got last year and just may be the highest total since the fund began paying such dividends in 1982. With oil near its lowest price since the 2008-09 financial crisis, the payout is testimony to discipline - and to the power of diversification………………………………………..Full Article: Source

The infrastructure kings

Posted on 09 September 2015 by VRS  |  Email |Print

Infrastructure funds could soon be benefiting from a Middle East sovereign wealth fund (SWF) client base. The region’s SWFs are growing in, and hiring in, expertise in infrastructure investment. Consequently, the jump from direct equity, where opportunities are limited, to secondary infra fund investment looks more and more certain.
Sovereign wealth funds went from being threats to the established financial order, to its saviours in the years after 2007. Now they are part of the global economy’s establishment, their assets under management swelling on the back of, until recently, persistent high oil prices. The funds have slowly and cautiously diversified out of real estate, listed equity and fixed income holdings in the last several years. Alternative assets, including private equity and infrastructure, have been comparatively recent areas of focus………………………………………..Full Article: Source

The Use of Debt by Sovereign Wealth Fund

Posted on 07 September 2015 by VRS  |  Email |Print

In this paper we document the use of debt capital by Sovereign Wealth Funds (SWFs). According to our estimates, as of 2014 there are 10 levered SWFs with outstanding debt around USD 180 billion. We identify three main reasons why SWFs may decide to resort to debt capital, namely: i) increasing their size and diversify their sources of funding; ii) contributing to the development of their domestic bond market, and; iii) optimizing their cost of financing at the group level.
Characteristics of levered SWFs — as opposite to funds restrained from using debt — are consistent with these goals. The use of debt is less common among SWFs from democratic countries, where it can entail higher political risk. Finally, we address the credit risk of levered SWFs and its relationship with the credit risk of their countries’ governments………………………………………..Full Article: Source

The Role of Sovereign Wealth Funds as Activist or Passive Fund Managers

Posted on 01 September 2015 by VRS  |  Email |Print

Sovereign Wealth Funds (SWF) have attracted a lot media attention with recent investments in publicly listed companies. Repeatedly, concerns have been raised, such as the fear of industrial espionage or geopolitical threats. We analyze whether SWF managers acquire stakes in foreign publicly listed firms 1) to play an active role which would support concerns or 2) passively select investments to increase the portfolio diversification, for instance.
We find that SWF target firms are more profitable, pay higher dividends and have a higher financial stability than their industry peers. This is in line with SWF managers passively seeking for further portfolio diversification in foreign public equity markets. We cannot find an improvement in operating or market performance after the engagement of SWF. Overall, our results indicate strong evidence that SWF managers primarily act as passive investors instead of pursuing activism strategies like private equity funds………………………………………..Full Article: Source

$7.1 Trillion In Global Sovereign Wealth Fund Assets

Posted on 31 August 2015 by VRS  |  Email |Print

As Credit Suisse notes, “oil exporting countries hold about $1.7trn of official reserves but as much as $4.3trn in sovereign wealth fund assets.” And while the composition of the SWF asset pool is likely to be far more multifarious than the makeup of official FX reserves making it more difficult to assess i) how quickly they could be liquidated in a pinch, and ii) what effect that liquidation would have on USD assets, especially USTs, the important point is that if we have indeed entered a new era in which crude and commodities are destined to trade at comparatively depressed levels, the pressure on exporters to adapt to the new reality could force them to begin drawing down the vast store of SWF assets.
Thus, if one wants to understand how large the petrodollar unwind could potentially be in the worst case scenario, it’s important to take stock of SWF assets………………………………………..Full Article: Source

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

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