The decline in oil prices had a trickle-down effect on money managers that run assets for sovereign wealth funds in 2015.
Total assets managed for sovereign wealth funds by money managers in Pensions & Investments' universe were $1.04 trillion as of Dec. 31, down 13.7% from 12 months earlier.
In fact, every manager among the top 10 ranked by sovereign wealth fund assets under management recorded declines in those assets during 2015.
State Street Global Advisors had the most sovereign wealth fund assets under management in 2015, at $103.4 billion, but still saw assets fall 8.8% from 2014. BlackRock Inc. was second in 2015, with $79.7 billion, down 14.4% from a year earlier. At year-end 2014, SSgA was second and BlackRock ranked third.
BNY Mellon Investment Management, which ranked at the top of the list at year-end 2014, was third in the current ranking at $78.831 billion — a 37% plunge.
Traditional equity and fixed-income managers saw the most asset declines as sovereign wealth funds reclaimed assets, said Jeffrey Levi, partner, Casey, Quirk & Associates, Darien, Conn. With oil prices down 60% since the end of 2014, wealth funds in oil-producing countries such as the 7.08 trillion Norwegian kroner ($851 billion) Government Pension Fund Global, Oslo, had money pulled by government agencies to fund national programs that otherwise would have been funded directly by oil revenues.
Managers running less-liquid strategies were spared from dramatic withdrawals; among the top 25 managers of sovereign wealth fund assets, only three — AXA Investment Managers, Brookfield Asset Management and Starwood Capital Group LLC — reported gains in 2015.
“Oil was the big driver for sovereign plans whose economies suffered significantly, and many of those countries tapped into their sovereign funds for funding needs,” Mr. Levi said. “Those assets were pulled from more liquid funds like equities and fixed income, and indexed equity particularly was a big loser. There was a mindset among those funds of a fire sale in the early stages of the price decline.”