The second annual Invesco Global Sovereign Asset Management Study, an in-depth report that looks into the behaviour of sovereign investors across the globe, found that more than half (54 per cent) of the region's sovereign wealth funds (SWFs), expect to get more money from the government this year than they did a year ago.
SWFs are pools of surplus money or savings that often cash-rich countries allocate for investments in various assets as a way to diversify revenue streams. As of 2012, the asset value of four
"We're seeing an increasing new funding this year. It shows that there's more confidence in giving these funds money to invest [outside rather than within the region], and as we come out of the financial crisis, there's more confidence in passing the money over," said
In the last two years, governments in the region pumped money into the local economy on the back of Arab Spring to create more jobs and build new infrastructure, among others. "The big change now is that they're giving the money to the SWFs to deploy it," Tolchard, who is also the co-chair of
Aside from private equity, real estate appears to be another potential winner among the region's investors, with 100 per cent of the respondents expecting more money to flow into the sector. "So, every single sovereign investor in the
The shift towards the emerging markets and alternative investments doesn't mean investors are looking for a short-term gain. "This is strategic and structural, so this is partly driven by the fact that they were underweight in these asset classes that produce high yield," said Tolchard. Another influencing factor is the expectation of additional funding and the fact that interest rates are low, making infrastructure and real estate ideal choices.
While there's a lot of money going out of the region, Tolchard pointed out that the
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