More NewsSovereign Wealth Funds Up 18% In 2008 To US$3.9 Trillion Despite Losses on Investments

Sovereign Wealth Funds Up 18% In 2008 To US$3.9 Trillion Despite Losses on Investments

Assets under management of sovereign wealth funds (SWFs) increased 18% in 2008 to reach US$3.9 trillion according to IFSL’s report Sovereign Wealth Funds 2009. The losses SWFs incurred on some investments during the past year were more than offset by inflows of new funds. There was an additional US$5.5 trillion held in other sovereign investment vehicles, such as pension reserve funds, development funds and state-owned corporations’ funds and also US$6.1 trillion in other official foreign exchange reserves.

The pace of growth of SWFs’ assets may slow somewhat in the next few years due to falls in commodity prices and the global economic downturn that may result in slower accumulation of foreign exchange reserves. IFSL nevertheless expects assets of SWFs to double to US$8 trillion by 2015. Since the start of the sub-prime crisis SWFs, mostly from Asia, have made substantial losses on US$60bn invested in US, Swiss and UK banks. Partly as a result of this and the global economic downturn, SWFs have placed more emphasis recently on injecting liquidity and helping to revive their local economies.

Countries with SWFs funded by commodities’ exports, primarily oil and gas exports, totalled US$2.5 trillion at the end of 2008. Non-commodity SWFs totalled US$1.4 trillion and are projected to increase their 35% share of assets in 2008 to 55% by 2015. Non-commodity SWFs are funded by transfer of assets from official foreign exchange reserves, and in some cases from government budget surpluses, pension reserves and privatisation revenue.

Marko Maslakovic, senior economist at IFSL said “SWFs have increased their influence on global financial markets since the start of the credit crisis. London is an important centre for SWFs both as a clearing house for transactions and a location from which some funds are managed. The many advantages it offers as a business location should allow it to capture a growing share of this market in the coming years.”

Sir Andrew Cahn, Chief Executive Officer at UK Trade & Investment (UKTI) said: “The UK’s long history of openness to foreign investment has seen SWFs be part of the UK financial services sector for more than 50 years. Economies best prepared to overcome the current global economic downturn will be those maintaining open markets to attract overseas investment, including SWFs.”

Related Articles

Infosys Finacle to power Santander UK’s international cash management system

More News Infosys Finacle to power Santander UK’s international cash management system

3w The Global Treasurer
Preparing for GDPR? Here’s four things to consider

More News Preparing for GDPR? Here’s four things to consider

4m Elliott Wiseman
Cash flow in focus for investors

Cash Management Cash flow in focus for investors

5m Conor Deegan
Treasury TV: Karen Pugsley, Domino's Pizza Group

More News Treasury TV: Karen Pugsley, Domino's Pizza Group

5m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

5m Victoria Beckett
Treasury TV: Tim de Knegt, The Port of Rotterdam

10 Minutes With The Treasury Treasury TV: Tim de Knegt, The Port of Rotterdam

5m Victoria Beckett
Banks are selling clients short with short dated cash deposit U-turns

Banking Banks are selling clients short with short dated cash deposit U-turns

5m Victoria Beckett
What does sterling’s Brexit boost mean for UK manufacturers?

More News What does sterling’s Brexit boost mean for UK manufacturers?

6m Tasja Botha