SWFs Up Nearly 20%, State Street Says

(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:

• 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.