Allocations to alternatives in sovereign wealth funds increase to almost a quarter

Exposure rose to 23%

Sovereign wealth funds (SWFs) have raised their exposure to alternative investments, including private equity, real estate, gold and infrastructure, from 19% of total AUM in 2010 to 23% by 2016, according to research by PwC.

In a report, entitled The rising attractiveness of alternative asset classes for sovereign wealth funds, PwC noted the majority of SWFs had previously followed a strategy focusing largely on fixed income, but quantitative easing and falling interest rates in developed countries had reduced the attractiveness of these products. As a result, the share of AUM invested in this asset class fell from a peak of 40% in 2013 to 30% in 2016. Meanwhile, in line with the strong recovery in the stockmarket since 2009, SWFs' allocation to equities increased. Driven by the desire to diversify por...