Sovereign Funds and Public Pensions Increase Direct ETF Purchases
Posted on 02/28/2021
According to transaction data from SWFI.com, sovereign funds and large public pensions increased direct purchases of listed exchange-traded funds (ETF) in recent years. ETFs are a way sovereign funds can make short-term to medium plays on sector, asset class, or country bets. For example, Saudi Arabia’s Public Investment Fund (PIF) bought a number of SPDR ETFs in 2020 during the COVID dip such as the Utilities Select Sector SPDR Fund. The COVID dip led was followed by the CARES Act in which, trillions of dollars in fiscal stimulus was added to the U.S. balance sheet. Canadian public pensions often buy and sell the VanEck Vectors Gold Miners ETFs and VanEck Vectors Junior Gold Miners ETFs.
In 2018, SWFI recorded US$ 5.076 billion in listed ETF purchases vs. US$ 7.87 billion in 2019, and US$ 10.68 billion in 2020.
Direct Investments in ETFs by Sovereign Wealth Funds and Large Public Pensions
Source: SWFI.com. Public Pension group of large funds only. U.S. Dollars.
By far, BlackRock’s iShares dominates the sovereign wealth and public pension direct investing market. From 2018 to the end of 2020, SWFI estimates that these investors bought US$ 9.53 billion worth of iShares ETFs. State Street’s SPDRs were next in line.
Keywords: BlackRock, Inc. State Street Corporation.