Sovereign funds boosting alternative investments

$6B global wealth manager aiming to boost returns with alts

Sep 30, 2013 @ 9:45 am

Sovereign wealth funds, which control about $6 trillion of wealth globally, are boosting investments in alternative assets like real estate and private equity to boost returns, a survey by Invesco Ltd. found.

The wide swings in equity prices and the “market-wide dissatisfaction with risk-return profile of equity investing,” together with low interest rates on fixed-income products, has pushed government-controlled funds to consider alternative assets to enhance growth, Invesco said in a report released in Dubai today. Alternative investments include international and local private equity, real-estate, hedge funds, infrastructure and commodities, according to the report.

Alternative investments made up 21% of the total assets of sovereign wealth funds in the west and these assets rose 26% in value over the last 12 months. The 29 surveyed funds, which controlled about 80% of global sovereign wealth fund assets, expected average annual returns of 8% from alternative assets, compared with 7% from equities, 4% from bonds and 2% from cash.

“There is also an increasing trend of direct investment in private equity rather than through third party funds,” Nick Tolchard, Invesco's managing director for sovereign investors, told a news conference today. Middle East sovereign funds including the Abu Dhabi Investment Authority and the Kuwait Investment Authority held about $2 trillion in assets, he said.

Invesco had $705.6 billion of assets under management at the end of June. Its second-quarter profit rose 32% to $202.6 million as equity market gains boosted assets.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why broker-dealers are on a roll

Deputy editor Bob Hordt and senior columnist Bruce Kelly discuss last year's bounce-back for IBDs.

Latest news & opinion

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule may give RIAs leg up over broker-dealers

Experts say advisers will be able to point to their role as fiduciaries as a differentiator in the advice market.

Brokers accept proposed SEC rule on who can call themselves an adviser

Some say the rule will clear up investor confusion, but others say the SEC didn't go far enough.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

SEC advice rule seeks to tighten reins on brokers

The proposed rule puts new restrictions on brokers, but it is still unclear how strongly the SEC is clamping down.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print