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Rediff.com  » Business » Sovereign wealth fund assets reach $4.62 trn

Sovereign wealth fund assets reach $4.62 trn

April 16, 2012 16:01 IST
The sovereign wealth funds have been getting richer with their assets under management rising to $4.62 trillion so far in 2012 worldwide, an increase of 16 per cent from last year.

"Total sovereign wealth fund assets under management stand at $4.62 trillion, an increase from $3.98 trillion in 2011," according to report by research firm Preqin.

SWF is a state-owned investment fund comprising of financial assets such as stocks, bonds, property, precious metals and other financial instruments that are invested globally.

"Despite widespread economic uncertainty regarding the sovereign debt crisis, volatility in many world financial markets and underperformance of certain asset classes, SWF aggregate assets have jumped by over half a trillion dollars," the report noted.

The report showed that more than half of all sovereign wealth funds - 57 per cent - were invested in private equity this year.

However, the overall proportion of such investment by institutions in private equity has fallen slightly in the last year, it said.

"...Over recent years, the number of sovereign wealth funds seeking to hold more diverse portfolios of investments, by both strategy and geography, has risen," Preqin Sovereign Wealth Fund Review Managing Editor Alex Jones said.

"Although financial markets remain turbulent, such institutions represent a significant amount of the capital invested in private equity and are likely to continue to allocate increasing amounts to the asset class going forward," Jones added.

Larger SWFs are more likely to invest in private equity than are their smaller counterparts, it said.

In terms of geographical analysis, the majority of SWFs investing in private equity (73 per cent) are based in Asia or the Middle East and North Africa region, compared to 17 per cent in North America, 7 per cent in Australasia and 3 per cent in Europe.

Interestingly, North America-focused investments are the most sought after, with 76 per cent of SWFs having a preference for investments in the region while 72 per cent seek exposure to Europe and 62 per cent are keen on Asia-focused investments.

The report said that 79 per cent of the SWFs investing in private equity funds prefer buyout vehicles, followed by venture funds.

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