SWF assets surge by Dh3.3 trillion in 18 months

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.

A total of 73 sovereign wealth funds have been established worldwide. Forty-six countries have at least one sovereign wealth fund, and almost half (48 per cent) of all funds globally have been in existence for over 10 years.

Sovereign wealth funds are key in the long-term growth and development of national economies; 58 per cent invest in economic infrastructure and 44 per cent invest in social infrastructure.

Asia-based sovereign wealth funds currently manage $2.7 trillion in assets (43 per cent of all sovereign wealth fund capital), compared to $2 trillion managed by Middle East-based institutions.

Norway-based Government Pension Fund Global is the largest sovereign wealth fund worldwide with $818 billion (Dh3 trillion) in assets under management. This is followed by the Abu Dhabi Investment Authority with an estimated $773 billion (Dh2.83 trillion) in assets.

“Sovereign wealth funds, despite being small in number and secretive in nature, continue to capture attention due to their ever growing assets under management and their corresponding influence on global financial markets. While these institutions have significant investments in traditional public equity and fixed income markets, sovereign wealth funds are a growing source of capital to alternative asset fund managers and investments across the globe,” said Amy Bensted – Head of Hedge Fund Products, Preqin.

“The influence of sovereign wealth funds in undeniable. These firms now manage over $6.3 trillion in assets, which have grown 17 per cent over the past 18 months. This growth has also been in the headwind of falling oil prices, one of the main sources of funding for these institutions. Furthermore, many sovereign wealth funds have been growing their exposure to alternative assets, with 60 per cent of these firms now having exposure to real estate and infrastructure investments.”

“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,” Preqin said in a statement.
 

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