Sovereign Wealth Funds See AUM Up $0.5T

Apr 13 2012 | 9:13am ET

The world’s sovereign wealth funds have been getting wealthier—their assets under management now stand at $4.62 trillion, up from $3.98 trillion in 2011, according to the latest data from Preqin.

The data provider’s 2012 Sovereign Wealth Fund Review reveals some other interesting facts about such funds—57%, for example, invest in private equity, a total which is actually down slightly in the past year. Breaking the data down further, the report says 46% of SWFs invest in private equity through fund commitments and 11% through direct investments.

Larger SWFs are more likely to invest in private equity than are their smaller counterparts: 83% of those with AUM over $250 billion invest in the asset class compared to 25% of those with AUM under $1 billion.

The majority of SWFs investing in p.e. (73%) are based in Asia or the MENA region, compared to 17% in North America, 7% in Australasia and 3% in Europe. On the other hand, North America-focused investments are the most sought after, with 76% of SWFs having a preference for investments in the region while 72% seek exposure to Europe and 62% are keen on Asia-focused investments.

A full 79% of the SWFs investing in private equity funds prefer buyout vehicles, according to the Preqin data. Next most popular are venture funds, with 59% of the SWFs polled expressing an interest in funds of this type.

Preference for multi-manager vehicles is growing—from 20% of SWFs in 2011 to 28% in the latest calculations.

“Sovereign wealth funds have a continued interest in private equity and many believe the asset class offers favorable long-term investment opportunities. Over recent years, the number of sovereign wealth funds seeking to hold more diverse portfolios of investments, by both strategy and geography, has risen. 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 forwards,” said Alex Jones of Preqin.


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