Sovereign funds boosting alternative investments

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

Sep 30, 2013 @ 9:45 am

+ Zoom

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

Featured video

INTV

Women's retirement needs and the opportunity they present for advisers

Assistant managing editor Lorie Konish speaks with contributing editor Mary Beth Franklin about the unique planning considerations for women as they prepare for income needs later in life.

Latest news & opinion

7 ways advisers fixed clients' biggest financial dilemmas

Sometimes it takes creativity, along with knowledge and outside help, to get a client out of a jam.

LPL Financial buys NPH, a broker-dealer network with 3,200 advisers

The deal, part of which is based on the advisers and revenue that eventually will move from NPH, could potentially cost LPL $448 million.

3 things advisers should make sure their clients' children take to college

Advisers can help clients avoid scary and painful situations with kids age 18 and older.

Private equity investors zero in on the RIA business

P-E proves to be ready and willing to invest in RIAs, but many will be looking to sell in three to seven years.

DOL fiduciary rule compliance costs exceed $4.7 billion: SIFMA study

Broker-dealers report paying hefty start-up costs and additional ongoing expenses, and are cutting the number of mutual funds they offer.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print