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Middle East SWFs focus on national economies
06 June 2012
A recent report shows that Middle East sovereign wealth
funds are focusing on markets closer to home in response
to the euro crisis and unrest in the region. Analysis by
Alastair O’Dell
Read more:
Sovereign wealth fund
SWF
Arab Spring
Sovereign wealth funds (SWFs) may be the titan investors of the financial world but they are not immune to the powerful geopolitical forces swirling around the global economy. The annual Invesco Middle East Asset Management Study published in May, covering 35% of global SWF assets equating to $1.6trn, reveals an abrupt change of focus due the combined effects of the eurozone crisis, Arab Spring and the lingering effects of the global financial crisis.
Invesco groups SWFs into four basic types. ‘Development agencies’ support local projects and ‘policy supporters’ support national or international objectives while ‘diversification vehicles’ seek to counter the petrochemical bias of economies and ‘asset managers’ seek risk-adjusted returns. Last year Invesco concluded that diversification vehicles accounted for 90% of assets of SWFs, making them the prime target for asset managers. However, over the course of the year the dominance of this type of fund has diminished.
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