Asia and Middle East sovereign wealth funds drive AUM growth -- Preqin reports

Global sovereign wealth funds double AUM in the last decade

SINGAPORE, June 15, 2023 /PRNewswire/ -- Preqin, the global leader empowering the alternatives community with essential data and insight, published its Sovereign Wealth Funds 2023 report. The report provides data and analysis on key trends in the sovereign wealth funds landscape, as these investors look towards making enhanced allocations to alternative assets, as well as narrowing the gap between actual and target allocations.

The report demonstrates that alternative assets continue to be important to the portfolios of sovereign wealth funds if they provide diversification benefits and good risk-adjusted returns. With their abundant financial resources and increasingly sophisticated investment teams, sovereign wealth funds have the kind of capital that can give them access to top-performing funds.

Key facts: 

• Assets under Management (AUM): In the last decade, global sovereign wealth funds have doubled their AUM total to $10.4tn by the end of Q1 2023.
• Asia: Asia's sovereign wealth funds led the increase in AUM, standing at $4.3tn by the end of Q1 2023. Notably, China Investment Corporation's total AUM of $1.35tn surpassed Norway's Government Pension Fund Global (GPFG) AUM of $1.2tn to become the largest sovereign wealth fund in the world.
• Middle East: The Middle East is home to some of the largest sovereign wealth funds which hold the second most in AUM of all regions globally, behind Asia. At $3.7tn, they account for 36% of the global sovereign wealth fund AUM.
• Allocations: Allocations of sovereign wealth funds to alternative assets as percentages of total allocations increased between 2021 and March 2023 in all asset classes, except for infrastructure. The biggest increase in the current median allocation was in real estate, from 6.5% in 2021 to 8.6%, by the end of Q1 2023.
• ESG: Sovereign wealth funds are influential in promoting environmental, social and governance (ESG) goals. Sovereign wealth funds with an ESG policy represent 59% of total sovereign wealth fund AUM, up 5 percentage points from 54% in 2021.

Harsha Narayan, Managing Editor and lead author of the report says: "Sovereign wealth funds have continued to build sophisticated in-house teams and are increasingly able to act more like a fund manager when deploying capital. They leverage talent, technology, and partnerships, with fund managers and investors to invest in various alternative asset classes, and they are growing more competent to conduct direct or co-investment deals."

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SOURCE Preqin