Sovereign investors reshape portfolios after year of negative returns

Sovereign investors reshape portfolios after year of negative returns

Middle Eastern SWFs and central banks drive green investment surge amidst widespread adoption of ESG policies Middle Eastern SWFs are looking to increase their allocation towards fixed income assets over the next 12 months Middle East investors capitalize on India's rising star in emerging market debt investments Middle Eastern SWFs prioritize private equity, infrastructure investments; show specific interest in industrial real estate, renewable energy A new generation of sovereign wealth funds has emerged, with the energy transition front-of-mind Dubai, UAE: Sovereign investors are adapting their portfolios to the new macroeconomic environment, characterised by sticky inflation and rising geopolitical and climate risk, according to the eleventh annual Invesco Global Sovereign Asset Management Study. The swift rise in interest rates and sharp correction in listed asset prices led most sovereign wealth funds to report negative returns for 2022, and the vast majority (86%) anticipate inflation to be higher in the coming decade than in the last. This includes 88% of sovereign investors based in the Middle East. In response, many are fundamentally rethinking the way they invest in fixed income and private assets, alongside a renewed interest in emerging markets. Invesco’s study, which has become the leading bellwether for sovereign investor activity,