Asian Sovereign Funds Try to Deal with Near Zero Interest Rates


Years have passed since the aftermath of the global financial crisis as central banks still prop up developed economies with quantitative easing (QE) policies. Institutional investors who placed bets on financial assets such as London real estate and U.S. equities, in general, clearly benefitted. The fragile recovery has prevented the Federal Reserve from lifting interest rates sooner. As stewards of public capital, sovereign funds like Singapore’s GIC Private Limited interpret the widespread adoption of low interest rates as a clear sign the world economy is sick and still needs help. The current interest rate regime has made it challenging for sovereign funds and other long-term investors to find “safe” investments, often forcing them to become lenders of capital.

Asian sovereign funds like GIC are positioning themselves for a possible rising rate cycle in the United States.

Financial assets such as core real estate and equities have benefitted from zero interest rate policies (ZIRP) being implemented by developed market central banks. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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