Asian Sovereign Wealth Fund Portfolios Still Dominated by Equities

Despite strong attention focused on allocation to alternatives such as private equity and real estate by Asian sovereign wealth funds (SWFs), their allocations to equities continued to dominate through year-end 2013, says a report by research firm Cerulli Associates Asia.

About 70% of Singapore’s Temasek Holdings’ investments are in listed securities, according to the Singapore firm’s latest annual report.

Korea Investment Corporation’s exposure to equities has been increasing steadily, from 41.8% in 2010 to 48.5% in 2013.

China’s China Investment Corporation has a slightly lower ratio of 40.4% of its portfolio in public equities as of 31 December 2013.

Singapore’s GIC Pte Ltd. has seen its equities allocation jump from 38% in March 2009 to 48% by end-March 2014.

"This is not unlike other institutional investors who are looking to diversify their assets and seek higher returns. The developed market rallies in 2013 affirmed the high equities allocations of Asian SWFs," says Cerulli analyst Evonne Gan.

Asian SWFs’ portfolios will continue to be dominated by equities. What is noteworthy is the relatively high level of active trading through investments and divestments that Asian SWFs participate in.

"An increasing asset base, challenging investment environment, and the pressure of seeking alpha mean managers that are top performers have opportunities for additional top-ups and new allocations," says Yoon Ng, Asia research director with Cerulli.

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