Monday, December 7, 2009

>2010: The return of the Sovereign Wealth Fund (ING VYSYA)

Having dominated the headlines in 2007 and 2008, Sovereign Wealth Funds (SWF) have been more introspective in 2009, looking to help beleaguered domestic economies.

Yet the resurgence of global trade volumes and the prospect of continued heavy FX intervention from Asian authorities suggest FX reserves and SWF assets under management (AUM) will rise.

The lack of transparency means that sizing the SWFs remains difficult. We believe AUM are closer to the lower end of the US$3-5tr range. We look for these to grow to US$6-8tr by 2015.

Yet transparency should improve in 2010 as SWFs implement newly agreed principles.

High-profile funds, such as China’s CIC, will probably take on more risk. CIC investment since July 2009 has centred exclusively on the energy sector.

To read the full report: SOVEREIGN WEALTH FUND