Global SWFs see slowdown in asset growth, says Preqin

18 April 2017   Category: News, Asia, Global, USA, Europe, United Kingdom   By Asia Asset Management

Global economic uncertainties have led to a sharp slowdown in AUM growth for global sovereign wealth funds (SWFs) over the past two years, according to London-based data provider Preqin.

Total AUM held by 76 SWFs globally grew just 1% to US$6.59 trillion in the 12 months to March 2017, even slower than the 3% growth in the year to March 2016, when AUM stood at $6.51 trillion, Preqin says in its latest review of SWFs released last week (April 12).

This marks a sharp deceleration from the double-digit growth of the prior two years, when assets grew by 17% between December 2011 and December 2012, and a further 16% the following year.

However, the majority, or 51%, of the SWFs saw their assets increase in the year to March 2017, and only 29% registered a drop compared with 36% a year earlier.

Selina Sy, editor of the review, says SWFs include some of the largest single investors in public or private equities, and as such their importance as an investor class remains large.

“However, the past 24 months have seen very little growth in their assets. This is evidence of the wide range of factors that affecting various funds globally at present – macroeconomic headwinds, low oil prices, and shift in domestic and economic policy from their governments have all contributed to this tapering off,” she says in the report.

According to the review, SWFs investing in public equities and fixed income declined to 79% and 78%, respectively, in the 12 months to March 31, 2017, from 80% and 82% a year earlier.

By contrast, they boosted investments in alternative classes: 61% had allocations to private equities and 63% to real estate, up from 55% and 62%, respectively, in March 2016.  

The report finds a wide variance in the size, scope and purpose of SWFs investing today. The top ten largest SWFs in the world collectively held $5.2 trillion in assets, or 79% of the entire investor class, as at March 2017. About 45% of all SWFs hold less than $10 billion in assets, and 26% only have exposure to traditional asset classes such as public equities and fixed income.