Total assets under management at sovereign wealth funds globally are expected to increase 44% to $5.5 trillion by the end of 2012, after having fallen by 3% in 2009 to $3.8 trillion, according to a report published by International Financial Services London.
IFSL, a U.K. financial-services industry organization, estimated that SWFs funded primarily from commodities exports such as oil held about $2.5 trillion in assets as of the year-end 2009. The remainder belonged to SWFs funded by reserves arising from sources unrelated to commodities such as manufacturing, public savings or fiscal surpluses.
The funds invested a total of about $10 billion in the first half of 2009, but increased their investments to a combined $50 billion in the second half of 2009, according to the report. Investments in financial services companies accounted for less than 20% of the total investments in the second half of 2009, which is substantially below the 45% average at the beginning of the millennium.
Led by China Investment Corp., Beijing, which has about $200 billion in assets, SWFs have allocated assets to infrastructure, industrial, agricultural commodities and other non-financial investments. “Recent SWF transactions suggest that acquisitions will be smaller and more diverse in the coming years with more focus on diversifying portfolios by investing in real estate, commodities and emerging markets,” according to the report.