Sovereign wealth funds prefer equities (Complete article)

Sovereign wealth funds are overwhelmingly exposed to equities and fixed income, according to the latest data from Preqin, a research firm which focuses on alternative asset classes.

SWFs’ appetite for Western assets - notably financial institutions, is on the wane, with many funds turning to domestic and regional investments. (FT Alphaville can’t help but wonder how Prince Al-Waleed bin Talal feels about that Citigroup investment these days…)
But despite recent losses, the aggregate total assets of these funds have continued to increase, the London-based Prequin said. Assets under management currently stand at $3,220bn, a six per cent increase from the same period a year ago and a 59 per cent rise compared with 2007. Of course, there’s a hedge:

This growth is primarily due to the reclassification of China’s $312bn SAFE Investment Company as a SWF following its purchase of a number of public and private equity interests in 2008. Khazakstan has also incepted a new fund - the $29bn Samruk Kazyna National Welfare Fund over the course of 2008, while Korea is one of the existing funds that has boosted the assets of its SWF over the past year. These funds have counteracted the effects of declining total assets of some SWFs that have suffered as a result of poor investment returns in the wake of the global economic downturn.