Sovereign Wealth Fund Investors Make Big Moves as the World Emerges From Crisis
Sovereign Wealth Funds – some of the most influential investors in the world – have made big moves in the past few months. As asset prices adjusted to the pandemic’s impact, sovereign funds swooped in to target bargains, diversify their portfolio and shift their investment strategy.
Currently worth $1.5 trillion, the Norwegian Sovereign Wealth Fund suffered the biggest blow in its history. The fund lost 16% in the first quarter of this year, as capital markets corrected across the world. Since then, the fund has replaced its chief executive officer and has had to withdraw a record 382 billion kroner ($37 billion) to meet the nation’s fiscal needs. That’s four times larger than the previous record set in 2016.
On the other side of the globe, Korea Investment Corp., South Korea’s $157 billion sovereign wealth fund, has been getting more aggressive in its equity purchases. CEO Choi Heenam told Bloomberg the fund could look for attractive investment opportunities in China and the US in coming months. The team is also sizing up so-called “pandemic bonds,” which are at the forefront of the boom in environmental, social and governance (ESG) investments. These bonds offer investors higher interest rates in exchange for taking on the risk of losing capital if a pandemic occurs.
The comparatively larger Public Investment Fund or PIF, Saudi Arabia’s wealth fund, has been even more aggressive than the South Korean team. The $300 billion fund has deployed over $2 billion in fresh capital to acquire stakes in Facebook, Disney, Carnival Cruises, Royal Dutch Shell, Bank of America and Marriott. Their latest investment was a $1.5 billion investment in Indian telecom giant Jio Platforms.
India’s Jio also attracted capital from other sovereign wealth funds, including the Abu Dhabi Investment Authority and UAE’s Mubadala Fund.