Major Gulf Sovereign Fund Retools Fund Manager Strategy
The oil crisis (for those who produce oil) has shed some light on the practices of Gulf sovereign investors. Sizable fund redemptions by SWFs occurred in 2015. For example, Northern Trust faced major outflows from several sovereign wealth fund clients, between March 2015 and March 2016. Plain-vanilla mandates are being challenged, can they be effectively replicated by using investment factors? According to SWFI Compass, an RFP and opportunity intelligence tracker, increasingly all types of public investors are asking for specialist mandates in credit, real estate and real assets. Firms like Oaktree Capital Management are flourishing in this low-yield world by raising capital and inking co-investment opportunities with public institutional investors. Several external fund manager strategists at sovereign funds are re-evaluating their asset allocation, investment processes and amount they should allocate to investment managers.
In addition, institutional investors are becoming increasingly concerned with inflation, a violent slayer of purchasing power, especially for intergenerational funds like sovereign investors.
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