Gill Wadsworth reported this week that the recent Invesco Global Sovereign Asset Management Study has found that geopolitical tensions and increased market volatility are driving sovereign wealth managers away from passive investment towards a more active solution.
Three-quarters of SWFs managing over USD100 billion say they will increase equity allocations to active strategies by 2027, which compares to 43 per cent of mid-sized funds and 36 per cent of smaller institutions.
Rod Ringrow, Head of Official Institutions at Invesco, says SWFs’ renewed emphasis on active management is not purely motivated by a search for alpha, but also as a means of managing geopolitical and market risk.
“SWFs are increasingly viewing active strategies as tools for navigating complexity and building portfolio resilience in an environment where traditional market assumptions are being challenged.”
He adds: “The rise of regional economic blocs and shifting trade patterns is creating greater dispersion in market returns, a condition that many SWFs see as fertile ground for active strategies.”
Emerging market private credit managers Gemcorp has sovereign entities among its investor base and we spoke with Gemcorp co-founder Parvoleta Shtereva this week who was commenting on their report, entitled: Unmasking the Potential: Navigating Opportunities, Myths and Strategies in EM Private Credit.
Shtereva says: “If you consider what for us are the basics of life, there is a huge lack of basic infrastructure and service provision and very importantly if you also think from the point of view of demographics, Africa and Asia will be the last geographies with a positive birth rate so the human workers of tomorrow you find them in these geographies so you have to put in place the infrastructure and basis of creating the industry to create employment.
“There are plenty of good vital projects to invest in so it is entirely scalable and then there is something else we see which is a lot of countries where the industrial sectors or economy are coming out of state control, addressing foreign investors, raising new funding and becoming more efficient.”
Beverly Chandler, Managing Editor, Institutional Asset Manager
For live updates please follow us on Twitter and LinkedIn.
