Sovereign Wealth Funds have become an increasingly important part of the institutional investor landscape. Since 2007, their assets under management have more than doubled and we expect this strong growth to continue. This is largely due to newly established SWFs and an increasing tendency for SWFs to derive their wealth from non-fossil sources. In line with the total growth of assets, PwC expects their investment strategies to incorporate more alternative assets into their portfolios.
This rise in alternatives can provide portfolio diversification to traditional assets such as equity and bonds, support economic development, and be used as a hedge against crises, which are aligned with the long-term investment horizon of SWFs. By incorporating alternatives into their portfolios, SWFs can take steps so that their portfolios are better able to weather external shocks and they can fulfil their mandates more effectively.
