Sovereign funds surge 11pc in 2010

ASSETS in sovereign wealth funds saw a second year of double-digit growth in 2010, new research showed yesterday.

Sovereign wealth funds, held mainly in the Middle East, North African and Asian (MENA) states, grew 11 per cent to $3.98 trillion (£2.45 trillion) at the start of 2011 from $3.59 trillion in 2010.

But the investment plans of several MENA funds including Libya’s $70bn fund look uncertain as civil unrest across the region continues, the 2011 Preqin Sovereign Wealth Fund Review warned. The conflict between government and rebels in Libya “could have ramifications for the future investment policies of the Libyan Investment Authority” as “its mandate could alter following any political change,” the report said. “The SWFs of both Algeria and Bahrain could also be affected. Collectively, the MENA-based SWFs in question have hundreds of billions of dollars in assets and changes in their investment policies would be widely felt.”

Sam Meakin, managing editor of the report, said funds’ “significant collective assets under management” meant they represent “an important potential source of capital for fund managers across all asset classes.”

The Abu Dhabi Investment Authority is the world’s largest such fund with $625bn in assets, followed by the Norwegian state pension fund with $531bn and two Chinese funds, the SAFE Investment Company and the China Investment Corporation, with $347bn and $332bn respectively.

Funds’ investment into alternative asset classes such as infrastructure, real estate and private equity should increase this year as they resume investment plans put on ice during the downturn.