Home > News > Asset Allocation > SWFs Up Nearly 20%, State Street Says
Asset Allocation

SWFs Up Nearly 20%, State Street Says

A study shows that SWFs have largely remained committed to their pre-crisis investment strategies despite market turmoil in the last eighteen months.

(April 19, 2010) — A survey by State Street Global Advisors (SSgA), the bank’s investment management unit, shows sovereign wealth funds in Asia-Pacific, Europe, Middle East and Africa grew to $136 billion in September 2009 from $114.5 billion in December 2008, an increase of 19% over nine months.

Boosted by a stock market rebound and new capital inflows, the MSCI World Index gained 27% last year, representing the biggest yearly surge since 2003, the survey said.

The world’s third-largest custody bank conducted the survey by forming a study group of 12 SWFs — six from the Asia-Pacific region and six from Europe, Middle East and Africa (EMEA) — to examine how their investment styles and strategies changed in 2009.

The shift in investments over the nine months shows a divestment from cash and a greater tolerance for higher-risk assets. According to the study, total assets under management among the 12 SWFs in September 2009 were broken down into the following categories:

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  • Cash strategies: $62 billion (down 8.6% compared to December 2008)
  • Equities: $53.1 billion (up 64%)
  • Alternatives: $17.3 billion (up 22%)
  • Fixed Income: $3.6 billion

The survey revealed that Asian funds experienced the fastest growth. The six funds in Asia-Pacific expanded assets by 41% to $14.9 billion in the nine months, driven partly by larger investments in stocks as the market rebounded, Bloomberg reported. The six SWFs in Europe, Middle East and Africa increased assets 17% to $121.1 billion.



To contact the <em>aiCIO</em> editor of this story: Application Administrator at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742
Home > News > Asset Allocation > Study: Private Equity Investors Lured by Higher Returns in Emerging Markets
Asset Allocation

Study: Private Equity Investors Lured by Higher Returns in Emerging Markets

A new study shows emerging markets significantly trump developed markets in terms of performance expectations for private equity.

(April 19, 2010) — According to a survey published today, more than half of private equity investors plan to invest in emerging markets.

Buyout shops are increasingly seeing emerging market investments, particularly in China, India and Brazil, outperforming European and US markets. That attraction to emerging markets is explained by China’s stronger-than-expected annual growth of 11.9% in the first quarter. Similarly, India is expected to grow 8.5% in the current fiscal year.

“Investors are clearly drawn to markets with strong underlying growth rates, which trumps leverage in driving returns,” said Sarah Alexander, president and CEO of EMPEA, in the release. “LPs now see a mature group of fund managers with the skills and experience to capture the private equity opportunities fueled by growth and to minimize investor risk.”

The study by private equity firm Coller Capital and the Emerging Markets Private Equity Association (EMPEA) found that 57% of investors plan to increase allocations to emerging markets over the next two years. A fifth of investors surveyed expect emerging markets’ net returns to exceed 25%.

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Only 11% of investors intend to slow their new commitments to private equity in emerging markets, compared with 38% in 2009. Those investors cite cash constraints as the primary obstacle to maintaining commitments, followed by an over-allocation to private equity, the survey showed.

Following China, Brazil and India, emerging Asian markets in Vietnam, Indonesia and Thailand are expected to see the greatest expansion of investments. “Sophisticated investors who have built their exposure in China and India are now looking for the next frontier and see great investment opportunities in less penetrated markets,” said Alexander in the release, adding that Brazil continues to lead the emerging markets in terms of attracting new investors.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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