Some of the world’s largest investors, including sovereign wealth funds (SWFs), have brought asset management in house in recent years, putting pressure on external managers’ revenues.
However, newly established sovereign wealth funds (SWFs) still require help accessing traditional investment strategies and mainstream asset classes, according to Cerulli Associates.
The company cited Nigeria’s planned trio of SWFs: “It is likely that much of that [work] will need the assistance of external managers,” said Barbara Wall, Europe research director.
Saudi Arabia has reportedly begun work on a second wealth fund, while Papua New Guinea, Mexico, Angola, Bangladesh, and Egypt are all at various stages of launching their own SWFs. Wall said such funds could be “lucrative sources of outsourcing mandates in their early years.”
“The growing number of resource-rich countries establishing sovereign wealth funds present an ideal opportunity for asset managers not sufficiently specialized or alternative to win mandates from established SWFs,” Cerulli stated.
These claims contrast with the moves made in recent years by funds such as the Abu Dhabi Investment Authority (ADIA), which has taken major steps to bring asset management under its own roof.
“What’s unusual about this move is that instead of bringing passive assets under its own supervision, the management that is being brought back in-house appears to be quite technical and specialist,” said David Walker, head of Cerulli’s European institutional research practice.
Walker cited the creation of a “high conviction” sleeve in ADIA’s internal equities department as “not normally the sort of mandate that a fund like this would take in-house.”
Related: Is ADIA a Threat to Asset Management? & How to Beat the Market: Go Big, Active, and In House