Invesco’s newly released global sovereign asset management study comes at an interesting time for some of the world’s largest and most influential investors. Based on input from 90 sovereign wealth funds and 54 central banks managing around US$29 trillion of assets, it shows that they are undertaking broad reassessments as “assumptions that shaped portfolio construction over the past decade are being revisited”.
But their actual shifts in asset allocations so far have been relatively small. Equity allocations fell to 30% from 32% in 2025. Other asset classes saw even smaller shifts, or none at all.
Furthermore, the broad asset mixes have stayed relatively constant over the past five years. Allocation to liquid alternatives, for instance, has remained at 4% since 2022, while exposure to illiquid alternatives has climbed from 22% to 24%.
That said, investors are shifting focus, with resilience becoming a central focus in diversification amid more frequent geopolitical shocks, less stable bond-equity relationships, and increased concentration in public markets. This is leading them to prioritise long-term capital preservation, and protection against tail risks and systemic shocks.
But while resilience is widely accepted as an objective, “the investment discipline required to deliver it is still being built”, according to Invesco.
Long-term investing is the core discipline for most of these investors, with current volatile conditions actually creating opportunities as well as risks. However, “governance, liquidity planning, and stakeholder management are the conditions that determine which institutions can actually stay long term when doing so is uncomfortable”, the report says.
Many large institutional investors appear to be long term in principle rather than practice, with political factors being especially important for sovereign institutions. The investment horizon of the institutions in the study averages 21.5 years, while the actual figure is closer to 12.6 years.
Market shocks naturally focus investors on short-term considerations. The response thus far appears to be some reallocation towards private assets and active management, more scenario analysis and portfolio stress testing, especially for central banks.
The problems and conclusions of such major investors should interest the entire investment community. It is concerning then to find so many of them still struggling to tackle the vagaries of the current market environment.
