With Great Pleasure

Michael Maduell, President of the Sovereign Wealth Fund Institute

Michael Maduell, President of the Sovereign Wealth Fund Institute

This is the third year SWFI has constructed its Public Investor 100 list, a ranking of top public fund and government executives compiled by SWFI staff. This list (will be released soon) is intended to highlight executives who have had a notable impact on the industry and/or their specific organization. Coming up with the top #25 was a seemingly insurmountable challenge due to the uniqueness and influence of each person. We even had to change our minds midstream due to real-time events such as monetary policy, asset owner innovation, adoptive strategies and investment returns. The New Zealand Superannuation Fund, with its aptly titled “Kiwi” model, outperformed Yale’s endowment this June fiscal year. And Canadian pension giants like CPPIB, which netted 18.7%, trounced U.S. pensions in 2015.

2015 has put pressure on U.S. pensions to rethink how they interact with private equity and real estate managers. As financial media pundits yammer over alternative fees and disclosure, pension executives are stuck trying to hit their annual return hurdles, while making sure they are not getting ripped off by mendacious insiders. With that being said, larger U.S. plans demand action on co-investments, feeling neglected behind sovereign funds and Canadian pension giants. Texas Teachers’ made the bold move to open an office in London, an action unheard of with U.S. plans.

Steady Sovereign Fund Growth

When I started writing about sovereign funds in 2007, the institutional investor class barely surpassed the US$ 3 trillion mark. To the financial press, wealth funds were the hedge funds of the early 2000s. Yet, today, even with the rapid fall of oil prices and shrinking Asian surpluses, wealth fund assets stand at over US$ 7 trillion. This number is far below investment bank estimates of 2007. In May 2007, Stephen Jen (then at Morgan Stanley) penned a research paper “How Big Could Sovereign Funds Be by 2015,” the assumption was sovereign funds would reach US$ 12 trillion by 2015.

Decarb Diet

The topics of ESG and decarbonization of portfolios has gathered tremendous attention. Endowments like University of California and Yale Investment Office have been under political pressure to drop their carbon holdings. Heavily pitched and marketed, our Institute Fund Summit 2015 Europe in Amsterdam, reflects this adoptive trend of sustainable investing. Consultants and advisors have propagated terms like “stranded assets,” forcing asset owners to rethink what is really in their portfolios.

This article is written by Michael Maduell and his opinions are his own and not officially of the Sovereign Wealth Fund Institute.

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