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Laxman Pai, Opalesque Asia: Sovereign Wealth Funds (SWF)'s median allocations to the big three private capital asset classes - private equity & venture capital, real estate, and infrastructure - have risen from 18% in 2011 to 30% in 2020.
Alternative assets have played a significant part in sovereign funds' success, revealed a study by Preqin.
"SWF investments in private equity, real estate, infrastructure, and private debt funds, as well as hedge funds, have grown substantially over the past decade, with cumulative SWF allocations to alternative asset classes now more than $700bn," said the 'Sovereign Wealth Funds in Motion' report, published by Preqin, in partnership with global law firm Baker McKenzie.
Private equity is the most popular asset class for Sovereign Wealth Funds, with a median allocation of 9.3%, followed by real estate at 6.7%.
SWFs are embracing a more active role in domestic economies and sustainable investments - while increasing investment and deepening relationships with the private capital industry, the report said. This has been propelled by a combination of internal initiatives and stakeholder pressure from within the funds and a variety of recent national and international regulatory developments.
"That said, just 19% of the 98 Sovereign Wealth Funds tracked by Preqin have a formal ESG policy at present. Generally, it is the larger funds that are committed to ESG, with $4.24tn (54%) of the $7.84tn in AUM...................... To view our full article Click here
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