Connect with us

Why Sovereign Funds are Unfazed by Latest Market Swings

Published

on

It has been hammered into the global collective consciousness that sovereign wealth funds are long-term institutional investors and contrarian stylistically at many instances. The latest U.S. stock market drop has put some investors at an impasse. Will the fall continue? How important is market timing?

The deleveraging of select institutional investors, such as systematic trading allocators, likely contributed to the stock market drop on the fifth of February. The plausible technical-driven sell-off has long-term pensions and sovereign funds licking their lips for the buy the dip moment. The California Public Employees’ Retirement System (CalPERS) months ago signaled they were increasing public equities and reducing the amount of private equity managers being used.

There is legitimate anxiety of higher interest rates with a new Federal Reserve chairman – Jerome Powell – among traders and investors. The Federal Reserve being cautious on triggering a U.S. recession is undoubtedly looking at consumer sentiment and production indicators, before the signal or vote on rate decisions for the near future. The slowdown in quantitative easing (QE) policies have already impacted global markets, causing a rise in bond yields across markets. Risk-seeking traders playing the short-term volatility game felt the heat in early February, after the massive single-day decline in stock markets. Despite sovereign funds having a pool of over US$ 7 trillion in assets, retail investors have a major role in the ups and downs of the U.S. stock market. Wall Street often markets exchange-traded products and mutual funds off of stock-trading websites and financial news sites. Many retail investors dabble in stocks and exchange-traded products (ETP).

VIX Product Collapse

The Monday mayhem of February 5, 2018, jolted investors, both retail and institutional money. Two exchange-traded products tied to the Chicago Board Options Exchange (CBOE) volatility index – or VIX – collapsed in afterhours futures trading on Monday – February 5, losing 95% of their value after the popular indicator of investor anxiety doubled in response to the worst day for markets since the summer of 2011. CBOE Global Markets paid the price later on the sixth; as of 4:00 p.m. EST that day, CBOE’s stock was trading down 10.42% at US$ 116.93 a share.

The VelocityShares Daily Inverse VIX Short-Term ETN (XIV) and ProShares Short VIX Short-Term Futures ETF (SVXY) – both issued by Credit Suisse – provide single-day returns on the inverse of the VIX, and have been immensely popular over the past year with traders banking on markets remaining mild. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Mumtalakat Contemplates Investing in SoftBank Vision Fund

Published

on

Bahrain-based Mumtalakat Holdings is interested in joining a chorus of sovereign funds committing capital to Japan-based SoftBank Group’s Vision Fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

Temasek Holdings Invested in IP Vehicle Formed by National Research Foundation

Published

on

Singapore’s Temasek Holdings committed at least 50 million SGD to back an intellectual property commercialization vehicle formed by Singapore’s National Research Foundation (NRF). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Continue Reading

NBIM Sells Interest in SZ Tower

Published

on

Norges Bank Real Estate Management, the real estate unit of Norges Bank Investment Management, has a partnership with AXA France. The partnership signed a deal on February 20, 2018, to sell the SZ Tower. The SZ Tower is located on Hultschiner Strasse 8 in Munich, Germany. Norges Bank Real Estate Management will receive €122.1 million for its 50% ownership interest. The property was acquired by the partnership in November 2013.

The buyer of the tower is a subsidiary of Cologne-based Art-Invest Real Estate GmbH & Co.

SZ Tower comprises 62,200 square metres of lettable space.

Continue Reading

Popular

© 2008-2018 Sovereign Wealth Fund Institute. All Rights Reserved. Sovereign Wealth Fund Institute ® and SWFI® are registered trademarks of the Sovereign Wealth Fund Institute. Other third-party content, logos and trademarks are owned by their perspective entities and used for informational purposes only. No affiliation or endorsement, express or implied, is provided by their use. All material subject to strictly enforced copyright laws. Registration on or use of this site constitutes acceptance of our terms of use agreement which includes our privacy policy. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. SWFI facilitates sovereign fund, pension, endowment, superannuation fund and central bank events around the world. SWFI is a minority-owned organization.