Assets owned by sovereign wealth funds — state-owned funds that invest surplus reserves — could quadruple in size to $12 trillion by 2015 from $2.8 trillion currently, according to a new report by Huw van Steenis, head of European banking research at Morgan Stanley. Since January 2006, the funds — which have become increasingly important as investors in global financial firms and asset managers — have invested $35 billion in strategic stakes in European banks and financial services companies and U.S.-based alternatives and private equity managers. More than half — $26 billion — was invested in the last six months.
Temasek, the $159 billion fund operated by the government of Singapore, has 38% of its portfolio invested in financial services companies, according to the report.
Currently sovereign funds favor firms with exposure to Asia and emerging markets, securities brokerage and “modern asset management” strategies such as alternatives, hedge funds and private equity.
