Sovereign funds report declining incomes

Sovereign wealth funds expect less new funding in 2017 than in either of the past two years, indicating that low oil prices have dented governments’ wealth.

A survey of 58 sovereign funds from around the world suggested that funds expected, on average, to receive new funding worth 5% of their asset base this year, compared with 7% last year and 8% in 2015. This year, they expected to cancel investments worth, on average, 3% of their assets.

“Withdrawals seem to be on a similar level to last year,” said Alex Millar of Invesco, which commissioned the annual survey. “But there’s been a drop down in new funding.”

The survey included funds from around the world, not only in the Middle East, however Millar said low commodity prices were responsible for much of the declines.

The report also noted an increased demand for alternative asset classes, for instance real estate and infrastructure. However the researchers found that execution challenges prevented funds from increasing their allocations to some alternatives.

This year’s Invesco study was based on interviews with 97 individuals at sovereign wealth funds, state pension funds and central banks with total assets of more than $12 trillion.

©2017 funds global mena

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