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SWFI First Read, April 28, 2017

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Australia’s Future Fund Rides the Bullish Wave into March 2017

As of March 31, 2017, the Future Fund reached A$ 129.6 billion in assets. David Neal, Managing Director of the Future Fund, said in a press release, “The Future Fund’s overall risk level remains unchanged and towards the lower end of our normal expectations. This reflects our view that we should only take on additional risk where the expected returns are appropriate. We continue to work hard and in a disciplined way to identify areas of opportunity, taking up those with attractive risk-adjusted returns and ensuring the portfolio is flexible and efficient.”

SEI Investments Loses to BlackRock in Bpf Meubel’s Fiduciary Mandate

Pensioenfonds Meubel (Bpf Meubel), a Netherlands pension fund for the furniture industry, named BlackRock as its fiduciary manager. BlackRock replaces SEI Investments as the fund’s fiduciary manager. In addition, SEI Investments oversees some 80% of the fund’s assets as an asset manager. In 2016, the fund had an annual return of 0.94%, as 46% of its assets are in fixed income versus 29% held in equity. In 2016, SEI Investments earned €6.5 million in its fiduciary manager mandate from Bpf Meubel.

Invesco to Buy ETF Provider Source from Warburg Pincus

Invesco is buying a majority stake in Source, a London-based exchange-traded funds (ETF) provider, from an affiliate of Warburg Pincus. Source oversees US$ 18 billion in assets, while managing US$ 7 billion in subadvised assets. Other investors holding their position in Source include Morgan Stanley, Nomura, Bank of America Merrill Lynch, Goldman Sachs and J.P. Morgan. Warburg Pincus had bought into Source in 2014. The financial advisor for Source is JPMorgan, while the legal advisor was Freshfields Bruckhaus Deringer LLP.

1MDB and IPIC Ink Conditional Agreement

Ever since the U.S. Department of Justice (DOJ) put heat on the 1Malaysia Development Berhad (1MDB) debacle, government officials from around the world involved want a faster resolution to outstanding issues. The issue between Mubadala and 1MDB encircles agreements on two bond offerings in which IPIC did not receive payment, even though 1MDB maintained they did. On April 24, 2017, 1MDB and IPIC agreed to a conditional agreement in which 1MDB would pay US$ 1.2 billion in two installments. The agreement is conditional on the Arbitration Tribunal in London. The agreement is awaiting a consent award by May 31, 2017.

RDIF and JBIC Make Progress on Key Terms for Russia-Japan Investment Fund

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Maiden Lane I Ends, Federal Reserve Aims to Shrink Balance Sheet

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The U.S. Federal Reserve’s balance sheet has been set to decline automatically since 2017, as the central bank has been liquidating funds from its US$ 4 trillion in Treasury bonds and mortgage-backed securities. As holdings matured, the Fed refrained from reinvesting them. This amounts to US$ 40 billion in monetary tightening monthly. Meanwhile, interest rates have slowly, and continuously, risen. The maturation of these Fed assets could exert upward pressure on long-term yields.

Mortgage rates, applications, and home sales have been falling, likely due to the rising rates. While rates are still historically low, U.S. President Trump has criticized the rate hikes. However, the Fed has no interest in changing course, and rates are set to continue to rise. According to Fed meeting minutes, “The Chairman suggested that the Committee would likely resume a discussion of operating frameworks in the fall.”

The size and content of the Fed balance sheet going forward will be a point of discussion for Chairman Jerome Powell. While there is no end in sight for the Fed’s plans to tighten economic policy, changing conditions may warrant further examination. With the U.S. stock market thriving, there is no indication that tightening has had a material impact on the economy. However, conventional wisdom asserts that the Fed will raise rates “until something breaks.” Market commentators have also suggested that, in the event of an emergency, the Fed will have a harder time stepping in due to the size of its balance sheet. A large part of the Fed’s monetary strategy is based around communications, and Fed-watchers have made a habit of hanging on every word. The Fed announced a shrinking balance sheet well in advance, and made gradual moves in that direction. The process has been smooth thus far. The Fed’s tightening will reach its peak, US$ 50 billion, in October. It is unclear exactly how much stimulus is still needed in the economy to reach the Fed’s 2% inflation target. The Fed’s easing policies have been criticized for the lopsided benefits they provided, more for Wall Street than Main Street. However, the easing will reduce their role in the market.

The End of Maiden Lane I

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QIA Gets a New CEO

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Sheikh Abdullah Bin Mohammed Al-Thani exited as CEO of the Qatar Investment Authority (QIA). He has been appointed as minister of state by Amiri Order No. (4) of 2018.

Mansoor bin Ebrahim Al-Mahmoud is appointed as the new CEO of QIA. He held positions in various organizations such as CEO of Qatar Development Bank and worked at Qatar Museums.

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SWFI First Read, September 19, 2018

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QIA Eyes Investment in Chinese Lender Lufax

The Qatar Investment Authority (QIA) is in talks about a possible investment into Shanghai-based Lufax, one of China’s largest online lenders. The seller of the possible stake is China’s Ping An Insurance (Group) Co. Ltd. Lufax’s official name is Shanghai Lujiazui International Financial Asset Exchange Co. Ltd.

Wealth Funds Back Hotpot Giant

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