Updated with correction
Sovereign wealth funds increasingly are turning to their money managers for their intellectual capital, rather than their skills in any particular investment strategy. And for the most part, money managers are willing to share more than their proverbial asset management bodies.
Sovereign wealth funds “are very interested in thought leadership — more so” than most other client segments, said Patrick Thomson, London-based managing director, global head of sovereigns, at J.P. Morgan Asset Management. “They can invest very broadly, and the biggest challenge most of them face is deciding on their asset allocation. That means partnering with people that can give them thought leadership around that investment,” he added.
With sovereign wealth funds expanding further overseas when it comes to setting up on-the-ground coverage, and bringing new investment capabilities in-house, they need advice, information and talent.
Invesco Ltd. launched its Sovereign Investment Program last year, a one-week “school of thought” aimed at senior analysts in the sovereign wealth funds, said Nick Tolchard, chairman of Invesco's global sovereign group and head of Invesco Middle East, in London.
“We are not trying to sell products or win mandates or sell capabilities — we are talking to the sovereign investors and helping them to build their own capabilities, their asset allocation and information, multiasset information, and risk management approaches,” said Mr. Tolchard.
“There is a great deal of demand for that kind of interaction. There is also a lot of interest in best practice — particularly within the bigger funds looking at how other large institutions are developing their strategic asset allocation and risk management, socially responsible investment and other issues,” he added.
Other money managers have similar offerings.
Among them, BlackRock Inc. has hosted more than 700 attendees in its training program in the last two years, with about one-third from sovereign wealth funds, said Terrence Keeley, managing director and head of BlackRock's official institutions group, based in New York.
“BlackRock is more than willing to share our cutting-edge knowledge and capabilities in asset allocation, fixed income and equities, as well as our unique expertise in risk management,” he said.
The program involves eight weeks of training, spread across four weeks in London, one week in San Francisco and three weeks in New York. The program is qualified by the CFA Institute for continuing education credits.
“BlackRock's job is not to manage all the assets of the SWF community; it is to partner holistically, to help every sovereign fund achieve their unique financial goals. Of course there are times when that involves external management, but also times when that means improving internal management, using (exchange-traded funds), or designing derivative overlay strategies. Frankly, we are agnostic about the financial tools they employ as long as it is in their genuine, best interest,” said Mr. Keeley.