(April 19, 2012) — Assets held by sovereign wealth funds rose by over 16% last year to hit $4.62 trillion, Preqin has reported.
Aggregate assets increased by over $0.5 trillion over 2011 and have ballooned since the end of 2007, when they were just $3.05 trillion, according to data monitor.
“Sovereign wealth funds have a continued interest in private equity and many believe the asset class offers favorable long-term investment opportunities,” said Alex Jones, Managing Editor of 2012 Preqin Sovereign Wealth Fund Review. “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.”
Meanwhile, Preqin’s study found that more than half of all sovereign wealth funds, 57%, invest in private equity. However, the overall proportion of such institutions investing in private equity has dropped slightly in the last year, as several newly established sovereign wealth funds have yet to make their maiden allocations to the asset class.
Size also matters when it comes to private equity investing among sovereign funds. Larger sovereign wealth funds are more likely to invest in the asset class than their smaller counterparts: 83% of those with over $250 billion in assets under management invest in private equity compared to 25% of those with less than $1 billion in assets under management.
Additionally, the study noted that North America-focused investments are the most sought after, with 76% of sovereign wealth funds having a preference for investments in the region. A total of 72% seek exposure to Europe, and 62% are keen on Asia-focused investments.
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