Global Sovereign Wealth Fund Assets Reach $5.38 Trillion


The global total assets of sovereign wealth funds reached US$5.38 trillion as of October 2013. It is the first time it has surpassed the US$5 trillion mark, according to research firm Preqin.

Sovereign wealth fund assets have been steadily increasing since 2008. It gained more than US$750 billion in additional assets since 2012, the largest jump in total assets since 2008.

Its strong growth is because of the large number of new sovereign wealth funds that have been formed over the past couple of years. The growing assets of existing
sovereign wealth funds have also attributed to the asset class’ growing clout.

The past year has seen some notable sovereign wealth funds being launched and started making investments, including Western Australian Future Fund, established in December 2012 with AU$1 billion.

Since 2012, 63% of the sovereign wealth funds tracked by Preqin have grown in
assets under management, due to both injections of new capital and growth of existing assets.

There has been some significant activity by sovereign wealth funds in the private equity and hedge fund space. Apax VIII closed in June 2013 with €5.8bn in commitments, including investments from three sovereign wealth funds: China Investment Corporation, Singapore’s GIC and Australia’s FutureFund.

Some regions have experienced stronger growth than others. The assets under management of Middle Eastern sovereign wealth funds have increased by 6%, compared to 19% growth in assets of Asia-based sovereign wealth funds.

Since 2008, sovereign wealth funds have grown by 68% in terms of assets under management.Its total assets now match that of the entire alternative assets industry, which Preqin estimates at approximately US$5.5 trillion.

More resource-rich economies opening new sovereign wealth funds and existing sovereign wealth funds continuing to expand and accumulate assets are likely to further stimulate growth in the sovereign wealth fund space in the future.

 

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  1. A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets. These assets can include: balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, fiscal surpluses, and/or receipts resulting from commodity exports. Sovereign Wealth Funds can be structured as a fund, pool, or corporation. The definition of sovereign wealth fund exclude, among other things, foreign currency reserve assets held by monetary authorities for the traditional balance of payments or monetary policy purposes, state-owned enterprises (SOEs) in the traditional sense, government-employee pension funds, or assets managed for the benefit of individuals.