Latest news with #SWFs
Bloomberg
4 days ago
- Business
- Bloomberg
Middle East Funds Offer a Wall Street Payday Favorite
Hi, it's Alex Dooler in Abu Dhabi and Dinesh Nair in Dubai, reporting on how a growing number of job candidates are asking Middle Eastern SWFs to offer them carried interest awards. Elsewhere, it's a sizzling summer for US IPOs. Today's top stories
Khaleej Times
22-07-2025
- Business
- Khaleej Times
Middle East sovereign investors recalibrate strategies amid geopolitical uncertainty and market shifts
Political and policy decisions have become core drivers of investment strategy, prompting sovereign investors to fundamentally reassess portfolio construction and risk management, a study showed. According to Invesco's annual Global Sovereign Asset Management Study, geopolitical tensions (84 per cent) remain the dominant short-term risks for sovereign wealth funds (SWFs) and central banks in the region, followed by a fallout from the Middle East conflict (68 per cent). An overwhelming majority (96 per cent) of respondents believe that geopolitical rivalry will be a key driver of volatility, while 91 per cent expect protectionist policies to entrench persistent inflation across developed economies. Most notably, 52 per cent of Middle East SWFs now see deglobalisation as a material threat to investment returns, underscoring a marked shift in the market narrative. Invesco's study, a leading indicator on sovereign investor behaviour, draws on the insights from 141 senior investment professionals, including chief investment officers, heads of asset classes, and portfolio strategists, from 83 SWFs and 58 central banks across the world, collectively managing $27 trillion in assets.* Active strategies gain traction alongside foundational passive exposure One of the key shifts in portfolio construction identified in the study is the greater use of active strategies by respondents. On average, Middle East SWFs maintain 78 per cent of their equities portfolio and 77 per cent of their fixed income portfolio in active strategies. The survey shows that 33 per cent of SWFs in the region are planning to increase active equity exposures over the next two years, with 50 per cent doing the same with fixed income. While passive strategies continue to provide efficiency and scale benefits, particularly in highly liquid public markets, active approaches are being used to address index concentration risks, navigate regional dispersion, and enhance scenario resilience in an increasingly fragmented landscape. At the same time, portfolio construction decisions such as asset class, geographic, and factor tilts are increasingly viewed as core expressions of active management. Fixed income redefined and reprioritised Due to a combination of geopolitical shifts and interest rate normalisation, traditional portfolio construction models are being rethought, with many SWFs turning to more dynamic portfolio approaches that includes more fluid asset allocations, enhanced liquidity management, and greater use of alternatives. Within this landscape, fixed income has assumed a new importance within SWF portfolios, becoming the second-most favoured asset class behind infrastructure. On a net basis, 30 per cent of Middle East SWFs plan to increase their fixed income exposure over the next 12 months. 'Amid geopolitical uncertainty and market shifts, investors across the Middle East are recalibrating their strategies,' says Josette Rizk, Head of Middle East and Africa at Invesco. 'Active asset management is growing in prominence due to its adaptability to a rapidly evolving economic environment. While private credit holds on to its popularity, fixed income has rebounded as the region's SWFs diversify exposures.' Private credit takes centre stage as a new diversification tool Private credit continues to gain momentum among SWFs in the Middle East, with 63 per cent accessing the asset class through funds and 50 per cent making direct investments or co-investments. The survey indicates that 50 per cent of SWFs worldwide, including 40 per cent of those based in the Middle East, plan to increase allocations to private credit over the next year. This growing interest reflects a broader rethinking of diversification as traditional stock-bond correlations erode in a higher-rate, higher-inflation environment. Sovereign investors are turning to private credit for floating-rate exposure, customised deal structuring, and return profiles that are less correlated with public markets. Once considered a niche asset class, private credit is now viewed as a strategic pillar of long-term portfolio construction. China remains a high priority in a fragmented emerging market landscape SWFs are taking a more selective approach to emerging markets. Asia (excluding China) is a high priority for 43 per cent of respondents worldwide and 25 per cent in the Middle East. Meanwhile, China is once again an important focus for 28 per cent SWFs globally and 33 per cent in the Middle East, with 60 per cent of the region's SWFs expecting to increase China allocations over the next five years. SWFs are increasingly orientating their China strategies around specific technology sectors, such as AI, semiconductors, EVs, and renewables, with 80 per cent of respondents in the region believing the country's technology and innovation capabilities will become globally competitive in the future. 'Middle East SWFs are focusing a large proportion of their portfolios on Asian economies,' adds Rizk. 'Based on the outcomes of our study, we anticipate rising investment flows between the Middle East and China, with higher growth potential in selected sectors.' Active management is viewed as essential in this environment. Just 25 per cent of Middle East SWFs rely on passive emerging market (EM) strategies, while 73 per cent access EMs through specialist managers, citing the need for local insight and tactical flexibility. Digital assets, continued exploration Digital assets are no longer seen as an outsider topic among institutional investors. This year's study shows a small but notable increase in the number of SWFs that have made direct investments in digital assets – 11 per cent, compared to 7 per cent in 2022. Allocations are most common in the Middle East (22 per cent), Asia Pacific (18 per cent), and North America (16 per cent), in contrast with Europe, Latin America, and Africa, where they remain at 0 per cent. For Middle East SWFs, the biggest barriers to investing in digital assets include regulatory challenges (100 per cent) and volatility (86 per cent). 'Investors are increasingly open to exploring the value digital assets may add to their portfolios,' says Rizk. 'In the Middle East, allocations are growing cautiously as investors balance new opportunities with regulatory challenges and market volatility.' Globally, central banks are simultaneously advancing their own digital currency initiatives, balancing innovation potential against systemic stability considerations. While no central bank respondents in the Middle East have launched a digital currency yet, 33 per cent are considering it, viewing efficiency in payments (100 per cent) and enhanced financial inclusion (44 per cent) as the biggest benefits of central bank digital currencies (CBDCs). Central bank resilience and gold's defensive role Central banks are reinforcing their reserve management frameworks in response to mounting geopolitical instability and fiscal uncertainty. In the Middle East, 67 per cent plan to increase their reserve holdings over the next two years, while 27 per cent intend to diversify their portfolios. Gold continues to play a critical role in this effort, with 63 per cent of central banks in the region expecting to expand their gold allocations over the next three years. Seen as a politically neutral store of value, gold is increasingly viewed as a strategic hedge against risks such as rising U.S. debt levels, reserve weaponisation, and global fragmentation. At the same time, central banks are modernising how they manage gold exposures. In addition to physical holdings, an increasing number are turning to more dynamic tools, such as exchange-traded funds (ETFs), swaps, and derivatives, to fine-tune allocations, improve liquidity management, and enhance overall portfolio flexibility without sacrificing defensive protection. This is expected to continue, with 21 per cent of central banks globally and 25 per cent in the Middle East saying they plan to hold investments in gold ETFs in the next five years, while 19 per cent worldwide and 25 per cent in the region intend to hold gold derivatives.
Zawya
21-07-2025
- Business
- Zawya
Mideast investors rethink strategies amid geopolitical uncertainty
Political and policy decisions have become core drivers of investment strategy, prompting sovereign investors in the Middle East to fundamentally reassess portfolio construction and risk management, according to the thirteenth annual Invesco Global Sovereign Asset Management Study. Geopolitical tensions (84%) remain the dominant short-term risks for sovereign wealth funds (SWFs) and central banks in the region, followed by a fallout from the Middle East conflict (68%). An overwhelming majority (96%) of respondents believe that geopolitical rivalry will be a key driver of volatility, while 91% expect protectionist policies to entrench persistent inflation across developed economies, stated Invesco in its study. Most notably, 52% of Middle East SWFs now see deglobalisation as a material threat to investment returns, underscoring a marked shift in the market narrative. Invesco's study, a leading indicator on sovereign investor behaviour, draws on the insights from 141 senior investment professionals, including chief investment officers, heads of asset classes, and portfolio strategists, from 83 SWFs and 58 central banks across the world, collectively managing $27 trillion in assets, it stated. One of the key shifts in portfolio construction identified in the study is the greater use of active strategies by respondents. On average, Middle East SWFs maintain 78% of their equities portfolio and 77% of their fixed income portfolio in active strategies. The survey shows that 33% of SWFs in the region are planning to increase active equity exposures over the next two years, with 50% doing the same with fixed income. While passive strategies continue to provide efficiency and scale benefits, particularly in highly liquid public markets, active approaches are being used to address index concentration risks, navigate regional dispersion, and enhance scenario resilience in an increasingly fragmented landscape. At the same time, portfolio construction decisions such as asset class, geographic, and factor tilts are increasingly viewed as core expressions of active management, it added. Due to a combination of geopolitical shifts and interest rate normalisation, traditional portfolio construction models are being rethought, with many SWFs turning to more dynamic portfolio approaches that includes more fluid asset allocations, enhanced liquidity management, and greater use of alternatives. Within this landscape, fixed income has assumed a new importance within SWF portfolios, becoming the second-most favoured asset class behind infrastructure. On a net basis, 30% of Middle East SWFs plan to increase their fixed income exposure over the next 12 months, it added. "Amid geopolitical uncertainty and market shifts, investors across the Middle East are recalibrating their strategies," remarked Josette Rizk, the Head of Middle East and Africa at Invesco. "Active asset management is growing in prominence due to its adaptability to a rapidly evolving economic environment. While private credit holds on to its popularity, fixed income has rebounded as the region's SWFs diversify exposures," she noted. Private credit continues to gain momentum among SWFs in the Middle East, with 63% accessing the asset class through funds and 50% making direct investments or co-investments. The survey indicates that 50% of SWFs worldwide, including 40% of those based in the Middle East, plan to increase allocations to private credit over the next year. This growing interest reflects a broader rethinking of diversification as traditional stock-bond correlations erode in a higher-rate, higher-inflation environment. Sovereign investors are turning to private credit for floating-rate exposure, customised deal structuring, and return profiles that are less correlated with public markets. Once considered a niche asset class, private credit is now viewed as a strategic pillar of long-term portfolio construction. SWFs are taking a more selective approach to emerging markets. Asia (excluding China) is a high priority for 43% of respondents worldwide and 25% in the Middle East, stated Invesco in the study. Meanwhile, China is once again an important focus for 28% SWFs globally and 33% in the Middle East, with 60% of the region's SWFs expecting to increase China allocations over the next five years. SWFs are increasingly orientating their China strategies around specific technology sectors, such as AI, semiconductors, EVs, and renewables, with 80% of respondents in the region believing the country's technology and innovation capabilities will become globally competitive in the future. "Middle East SWFs are focusing a large proportion of their portfolios on Asian economies,' noted Rizk. 'Based on the outcomes of our study, we anticipate rising investment flows between the Middle East and China, with higher growth potential in selected sectors," she noted. Active management is viewed as essential in this environment. Just 25% of Middle East SWFs rely on passive emerging market (EM) strategies, while 73% access EMs through specialist managers, citing the need for local insight and tactical flexibility. Digital assets are no longer seen as an outsider topic among institutional investors. This year's study shows a small but notable increase in the number of SWFs that have made direct investments in digital assets – 11%, compared to 7% in 2022. Allocations are most common in the Middle East (22%), Asia Pacific (18%), and North America (16%), in contrast with Europe, Latin America, and Africa, where they remain at 0%. For Middle East SWFs, the biggest barriers to investing in digital assets include regulatory challenges (100%) and volatility (86%). "Investors are increasingly open to exploring the value digital assets may add to their portfolios," stated Rizk. "In the Middle East, allocations are growing cautiously as investors balance new opportunities with regulatory challenges and market volatility," she added. Globally, central banks are simultaneously advancing their own digital currency initiatives, balancing innovation potential against systemic stability considerations. While no central bank respondents in the Middle East have launched a digital currency yet, 33% are considering it, viewing efficiency in payments (100%) and enhanced financial inclusion (44%) as the biggest benefits of central bank digital currencies (CBDCs). Central banks are reinforcing their reserve management frameworks in response to mounting geopolitical instability and fiscal uncertainty. In the Middle East, 67% plan to increase their reserve holdings over the next two years, while 27% intend to diversify their portfolios. Gold continues to play a critical role in this effort, with 63% of central banks in the region expecting to expand their gold allocations over the next three years. Seen as a politically neutral store of value, gold is increasingly viewed as a strategic hedge against risks such as rising US debt levels, reserve weaponisation, and global fragmentation. At the same time, central banks are modernising how they manage gold exposures. In addition to physical holdings, an increasing number are turning to more dynamic tools, such as exchange-traded funds (ETFs), swaps, and derivatives, to fine-tune allocations, improve liquidity management, and enhance overall portfolio flexibility without sacrificing defensive protection. This is expected to continue, with 21% of central banks globally and 25% in the Middle East saying they plan to hold investments in gold ETFs in the next five years, while 19% worldwide and 25% in the region intend to hold gold derivatives. Copyright 2024 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Al Etihad
28-04-2025
- Business
- Al Etihad
Sovereign wealth funds are a major global investment force
29 Apr 2025 01:20 By: Abdulla Abdulrahman AlKhaja*Sovereign wealth funds (SWFs) emerged in the mid-20th century and rose to prominence in the following decades, becoming key players in the global investment landscape. These funds aim to drive growth and stability by investing financial surpluses, foreign currency reserves, and revenues from natural resources in international markets to achieve economic and financial of the end of 2024, SWFs worldwide manage assets exceeding $13 trillion, an increase of approximately 11.1% compared to $11.7 trillion in 2023. The practices of SWFs in the global economy have proven effective in promoting stability during times of crises, mitigating the risks of resource depletion or market volatility. Domestically, these funds contribute to maintaining stability amid declining resources and market fluctuations, safeguarding the rights of future generations to a better quality of life, and supporting broad-based economic growth through diversified economies. They also champion strategies that boost investments and encourage local enterprise are typically managed by national authorities. They operate under strict risk management guidelines, focusing on prudent asset allocation and diversifying value-preserving and value-adding projects, with the goal of achieving stronger medium- and long-term invest across a broad range of global asset classes, including equities, real estate, infrastructure, and technological innovation. Their aim is to diversify national economies and support investment sectors and development projects at both the local and international levels, thereby enhancing a country's competitiveness within the global economy. By investing worldwide, SWFs help mitigate risks associated with exposure to a single national economy or specific industry. During crises, such as the 2008 financial crunch and the COVID-19 pandemic, markets slow down, but through investment diversification, SWFs ensure they are not overly exposed to a single asset class that could suffer heavy losses. During times of economic downturn, when asset prices are low, their investment strategies can help stabilise financial markets by providing liquidity and restoring investor confidence. Moreover, their focus on long-term investment offers a more prudent approach, as it is less affected by short-term market the 2008 global financial crisis, SWFs played a critical role in rescuing global markets from collapse, particularly in the United States and Europe. They invested heavily in major companies and banks that were on the verge of failure. As a result, these funds are now highly relied upon both in the West and the East, especially as they increasingly turn their investment focus towards emerging markets in Asia, Africa, and Latin also have a significant impact on infrastructure projects, such as transportation, energy, water, and technology, thanks to their ability to rapidly inject capital for long-term investments without the need to wait for external financing. In the experiences of several countries, SWFs have successfully driven major transformations in infrastructure and economic development. During periods of economic crisis, these funds serve as critical sources of financing, helping nations recover from the effects of natural the Middle East, the establishment of SWFs began in Kuwait in 1953, with the aim of transforming oil revenues into long-term economic security, ensuring a prosperous future for coming generations, and safeguarding the country's economic stability in the post-oil era. In the UAE, Mubadala Investment Company stands out as one of the world's leading SWFs in terms of spending, injecting $29.2 billion into global markets in 2024. Meanwhile, Norway's Government Pension Fund Global continues to hold the title of the world's largest SWF, approaching the $2 trillion mark, followed by the China Investment Corporation. The Abu Dhabi Investment Authority manages around $1.1 trillion in assets, while the Kuwait Investment Authority manages approximately $969b. Saudi Arabia's Public Investment Fund follows closely with around $925b in assets under management. Today, SWF investments are no longer concentrated solely in Western markets; the Global South, including Middle Eastern and developing Asian nations, has become an increasingly important destination. Investments are growing particularly in renewable and clean energy sectors, green transition initiatives, and climate change mitigation efforts. SWFs represent a formidable force in the global economy, thanks to their vast asset bases – estimated at around $136.1 billion in 2024, according to Global SWF – and their ability to adapt to economic and geopolitical shifts. They are helping to shape the future of global investment and are increasingly recognised as a critical engine for sustainable development worldwide. *The columnist is a writer at the think-tank firm TRENDS Research & Advisory
Khaleej Times
26-03-2025
- Business
- Khaleej Times
Gulf sovereign fund assets set to hit $18 trillion by 2030
Spearheaded by the UAE's three major funds, Gulf Sovereign Wealth Funds (SWFs) are emerging as key players in the global investment arena. With total assets under management projected to soar from $12 trillion at the end of 2024 to $18 trillion by 2030, these funds are set to redefine the global investment landscape. At the forefront are five formidable entities: the Abu Dhabi Investment Authority (Adia), Mubadala, Abu Dhabi Developmental Holding Company, Saudi Arabia's Public Investment Fund (PIF), and the Qatar Investment Authority (QIA). Together, they dominate regional investment activities, showcasing the Gulf's growing influence on the global stage. A remarkable trend accompanying this growth is the rise of Royal Private Offices (RPOs), which now control around $500 billion in assets. According to a Deloitte report, these RPOs have become essential in shaping the future of sovereign wealth funds in the region. They often mirror the activities of established funds, blurring the lines between state-controlled entities and private family offices. This trend has led to the creation of new funds linked to influential families, further diversifying the Gulf's investment portfolio. The report highlights that Gulf SWFs have been on an aggressive investment spree, deploying $82 billion in 2023 alone and another $55 billion in the first nine months of 2024. With approximately 40 per cent of global SWF assets under their control, and six of the ten largest funds worldwide, these entities are not just participants — they are reshaping investment strategies amid intensifying competition. Julie Kassab, Deloitte's sovereign wealth fund leader for the Middle East, underscores the Gulf region's pivotal role: 'We are witnessing these funds not only expand their geographical footprint but also significantly enhance their internal capabilities. They are setting new standards for performance and governance.' A significant shift in focus is evident as Gulf funds increasingly invest in fast-growing markets outside traditional Western economies. With an eye on Asia, they are establishing offices in the Asia-Pacific region and ramping up allocations to burgeoning economies such as China, India, and Southeast Asia. Notably, Gulf SWFs have invested an estimated $9.5 billion in China in the year ending September 2024, positioning themselves as key players in a market where Western investors are pulling back. Africa is another frontier of interest, particularly in the mining sector, as Gulf states look to capitalise on high-risk extractive ventures. The UAE and Saudi Arabia are actively investing in this area, both directly and through multinational mining firms, signaling their readiness to explore new opportunities. As competition intensifies, Gulf SWFs are under pressure to enhance their performance and risk management practices. Many are adopting a more proactive stance, seeking better reporting from portfolio companies and asserting influence at the board level. This drive for excellence has also intensified the competition for talent, with Gulf funds employing around 9,000 professionals and offering attractive packages to lure seasoned experts from established global funds. However, the global landscape is shifting towards protectionism, particularly in developing economies. Governments are reassessing their strategies regarding strategic assets, leading to the emergence of domestically focused funds that aim to co-invest alongside international partners rather than compete directly with Gulf players. Deloitte also notes a growing trend toward protectionism globally, particularly in developing economies, where governments are reassessing their approach to strategic assets. This shift has led to the creation of new domestically focused funds, often designed to co-invest alongside international partners rather than compete directly with established Middle Eastern players.
