Sovereign Wealth Funds Have Over $3.39 Trillion in Stocks
Posted on 02/21/2021
According to standardized asset allocation data from SWFI.com, sovereign wealth funds hold US$ 3.399 trillion in stocks from the latest financials of aggregated SWF figures. In total, the sovereign wealth fund investor market is US$ 8.2569 trillion. With 41.1% of total SWF assets in listed equities, the sovereign wealth fund investor class is more apt to public equity risk versus central banks, development banks, and government banks. In addition, major SWF contributors to listed equity holdings include: Abu Dhabi Investment Authority (ADIA), Norway Government Pension Fund Global, China Investment Corporation (CIC), Kuwait Investment Authority (KIA), and Singapore’s GIC Private Limited. Global sovereign wealth funds have been incrementally allocating more capital to listed equities since 2000. At times, SWFs have been opportunistic in expanding their portfolios into stocks. For example, earlier in 2020, Saudi Arabia’s Public Investment Fund (PIF) picked up a sizable stake in cruise company Carnival Corporation. During the frenzied time in early 2020, PIF also acquired a stake worth roughly US$ 200 million in Equinor ASA (formerly Statoil), the Norwegian oil-producing giant. PIF most likely snagged the listed shares in Equinor during the first week of April 2020. PIF took key advantage of global equity market slumps, as the economic fallout of the COVID-19 pandemic, had put some stocks deep into the red territory. Saudi Arabia had transferred a total of US$ 40 billion from central bank foreign exchange reserves to fund investments by PIF in March and April 2020. PIF sold off large positions in many of these blue chips over the course of 2020, including Warren Buffett’s Berkshire Hathaway.
The US$ 3.399 trillion in stocks compares to US$ 1.63 trillion in stocks in 2010. In a decade, SWFs added around US$ 1.77 trillion in public equities exposure.
Norway’s SWF increased its proportions into listed equities over the past decade. In 2020, Norway Government Pension Fund Global returned 10.86%, or 1,070 billion kroner. The return on the fund’s equity investments was 12.1%. Norway’s SWF has around US$ 927 billion in listed equities at the end of 2020. In the last few years, many large global swfs were keenly aware of big tech’s profits and growth, as well as their rapid ascension in index weights.
How Do Sovereign Wealth Funds Invest?
Sovereign investors invest in a wide range of asset classes, from fixed income, to private equity, all the way to timberland. When it comes to stocks, some sovereign wealth funds have internal teams to pick stocks, while others allocate to external fund managers.
Sovereign wealth funds will continue to play a major role as owners in public stocks. The question looms is what impact will they have on corporate governance, as they incrementally increase ownership in public companies.
NOTE: SWFI.com is the global asset owner terminal service of SWFI.
