Gaining Clout, Top 10 SWFs Invest $1 Trillion in Stocks

October 22, 2009) – In a further indication of their growing coffers and clout, the world’s 10 largest sovereign wealth funds (SWFs) now invest almost half of their $2.2 trillion in assets in global stock markets.

According to estimates from New York-based Investor Responsibility Research Center Institute and RiskMetrics Group, the 10 largest funds—ranging in location from Australia to Norway to Abu Dhabi—now invest upward of $1 trillion in stocks. Abu Dhabi—presumed to be the world’s largest fund at $600 to $700 billion, reportedly invests up to 60% of its assets in stocks. Although often feared to be predatory investors in America’s economy, SWFs are gaining more trust and are more active in global markets, as evidenced by the topping of the $1 trillion stock mark. However, they still have a ways to go: The total global stock markets’ capitalization is upward of $40 trillion.

However, despite recent commitments to the Santiago Principles—best-in-class investing principles agreed upon by many of the world’s largest SWFs—compliance at some of the largest funds is lacking, which may further stoke fears of predatory practices on the part of SWFs. According to the report, the Qatar Investment Authority—a $62 billion fund, ensconced at number 82 in the aiGlobal 500   list of the world’s largest asset owners—had the lowest level of compliance among the world’s top funds, with a “no compliance” rating of 58%. Australia’s Future Fund and Norway’s oil fund had the highest compliance ratings.