Sovereign Funds Turn Away From Hedge Funds

Feb 9 2012 | 3:54am ET

More and more hedge funds are looking to sovereign wealth funds to bolster their assets. But they may be looking in the wrong place.

While sovereign funds continued to increase their assets last year, they didn't put that new money into hedge funds, according to a new study from TheCityUK. Overall portfolio allocations to hedge funds decreased, as did the overall number of sovereign funds investing in the asset class, which dropped slightly from 37% to 36%.

"In 2011, overall direct investments of SWFs were about a quarter below the previous year's levels and down about 40% on the peak in 2009," TheCityUK researcher Marko Maslakovic said. "There is more diversification, transaction sizes are smaller and SWFs have increased allocation to emerging market countries."

"They are also focusing more on their own domestic markets," Maslakovic continued. And worse, "the more cautious approach to investments may very well continue in the forthcoming period."

Sovereign fund assets rose 9% to $4.8 trillion last year and are expected to grow by a further $400 billion this year.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

FATCA for Hedge Funds: Eight Common Pitfalls

Sep 1 2015 | 10:56am ET

FATCA is now a way of life for those in the financial industry and most professionals...

 

Editor's Note