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Sovereign Wealth Funds Could be Growing Even Faster in 2012

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Commodity-based sovereign wealth funds could see assets under management grow at a faster pace compared to 2011. In 2011, sovereign wealth assets grew by an estimated US$ 422 billion. The year before, sovereign assets grew by US$ 384 billion. The mechanized funding amounts of commodity-based wealth funds are vulnerable to the volatility in oil, mineral, and natural gas prices. Oil prices are on the rise and equity markets have been faring better in recent weeks. The Dow hit 13,000 briefly. With a combination of positive investment returns and increased commodity prices, there is a high probability SWF assets could pass US$ 5 trillion in assets. If investment returns sour in 2012, commodity-based SWFs will make up a bigger portion of the total sovereign wealth fund asset pool. In addition to commodity price increases and positive asset returns, more and more countries are creating commodity-based sovereign funds.

Interval Year Sovereign Wealth Asset Growth (Billions USD)
2009 -118
2010 384
2011 424

Around a quarter of the world’s oil supply comes from the Gulf region.

Around the world, end users of oil face supply risk from a myriad of sources. The Strait of Hormuz is a critical juncture in which a significant percentage of the world’s seaborne traded oil traverses through. Luckily, for oil-based sovereign funds, oil prices have a firm floor to stand on. Increased demand from China and Occidental nations continue to hold oil prices at a firm level. In contrast with a firm floor, oil prices have a soft ceiling due to the nature of geopolitics and foreign affairs. In fact, China and India are already stockpiling and seek to build their own strategic reserves akin to what the United States has.

BlackRock Contemplates Stake in Eurizon

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Asset management giant BlackRock is contemplating purchasing a 30% ownership stake in Intesa SanPaolo’s asset management unit called Eurizon Capital SGR S.p.A. BlackRock is keen on growing its technology business and increase market adoption of its Aladdin platform.

Intesa has been working with UBS to seek out strategic options for Eurizon. Intesa is keen on maintaining control over Eurizon.

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SWFI First Read, June 22, 2018

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JPMorgan Fund Buys 40% of Oxford Properties’ French Portfolio

A fund advised by JP Morgan Asset Management committed €400 million in Oxford Properties’ French portfolio. Essentially, Oxford Properties sold a 49.9% non-managing interest in 32 Rue Blanche, 92 Avenue de France and Paris Bastille. Oxford Properties made its maiden investment in Paris in 2014 when it acquired 32 Rue Blanche.

Oxford Properties is the real estate unit of OMERS.

Temasek Explores Further Cash Commitments to FirstCry

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DOL Fiduciary Role is Struck Down by Fifth Circuit Court of Appeals

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The U.S. Court of Appeal, Fifth Circuit, confirmed a March 15th decision to strike down the U.S. Department of Labor’s (DOL) fiduciary rule. The fiduciary rule is a series of seven different rules that broadly interpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appear in the Employee Retirement Income Security Act of 1974 (ERISA). The 5th U.S. Circuit Court of Appeals overturned a decision by a Dallas federal court that had upheld the DOL fiduciary rule.

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