Should Sovereign Wealth Follow Fundamentals or Central Bank Tunes?

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Institutional investors are living in a low-return environment, in which quantitative easing (QE) policies and negative interest rates have puffed up financial markets. As sovereign funds navigate the world of listed equities, would it be prudent for them to follow company and country-economic fundamentals versus paying more attention to monetary policy? Monetary policy divergence appears to be slowly receding, as the European Central Bank (ECB) and Bank of Japan (BOJ) continue easing, while the Federal Reserve plans to limit the number of interest rate hikes it expects in 2016.

In addition, SWFI Compass, an RFP and opportunity tracking service by SWFI, has witnessed an increase in U.S. equity mandates by public institutional investors such as pensions, since the start of January 2016.

What Happened in March

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