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Global Sovereign Wealth Fund Assets Up 16%

Sovereign wealth funds globally have added over US$750 billion to their total assets under management over the last year, from US$4.62 trillion in 2012 to US$5.38 trillion in 2013 with an increase of 16%, according to latest research from private equity research firm Preqin.

Asia-based sovereign wealth funds have shown some of the largest growth in assets under management, with the assets of these sovereign wealth funds growing, on average, by 19% since 2012.

This is in comparison to the average 6% growth in assets under management exhibited by Middle Eastern sovereign wealth funds.

Asia-based sovereign wealth funds account for a significant 47% of global aggregate sovereign wealth fund assets, despite only representing 22% of sovereign wealth funds globally by number.

Fifteen new sovereign wealth funds have been formed since 2008, with eight of these being formed in the past two years alone.

The largest sovereign wealth fund globally is Government Pension Fund Global based in Norway, with US$775.2 billion in assets under management. Its assets represent an increase of US$185 billion since 2012.

The proportion of sovereign wealth funds investing in private equity and hedge funds has decreased over the past year, from 57% and 38% investing in private equity and hedge funds respectively in 2012 to 45% and 31% respectively in 2013.

Some of this decline can be accounted for by the growth in the number of new sovereign wealth funds being established, as these newer sovereign wealth funds
typically will not allocate to alternative investments for a few years as they build up their investment teams and accumulate assets.

However, appetite for real estate and infrastructure has remained steady, with 54% of sovereign wealth funds investing in real estate in both 2012 and 2013, and the proportion investing in infrastructure rising slightly from 56% in 2012 to 57% in 2013.

A little over 70% of sovereign wealth funds investing in private equity have a preference for venture capital investments, a significant increase on the 59% which cited the same preference in 2012.

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