The amount of money sitting in sovereign wealth funds grew in 2009. As financial markets around the world recovered from the severity of the financial crisis that struck in September 2008, the coffers of these unique financial entities swelled to $3.51 trillion, according to the latest research from the alternative investment analysts at Preqin.
Nonetheless, some funds did experience withdrawals by their respective governments. In some cases, governments used sovereign wealth fund assets to close budgetary gaps.
At the level attained in 2009, aggregate sovereign wealth fund assets under management grew by 9%, from $3.22 trillion at the end of 2008. Norway's Government Pension Fund was among the biggest winners, with returns of above 25% last year and more than $400 billion in assets under management. Russia's Reserve Fund, on the other hand, was hit hard. It lost more than half its size through 2009, and assets under management have plunged to around $60 billion. Withdrawals have contributed to this situation, as the Russian government has tried to cover its federal fiscal deficit.
Forty percent of the assets of sovereign wealth funds worldwide are controlled by funds based in Asia, and 80% of all sovereign wealth funds are known to invest in public equities, with a similar number putting money into fixed income investments, according to Preqin. Fifty-five percent put their resources into private equity, 51% in real estate, 47% in infrastructure and 37% in hedge funds.
According to Sam Meakin, Managing Editor of the 2010 Preqin Sovereign Wealth Fund Review, "The increase in the aggregate assets under management of sovereign wealth funds, which has been assisted by the start of the global recovery, demonstrates that their collective influence in the world of institutional investors has not diminished. Many sovereign wealth funds that had put portfolio diversification plans on hold are now considering resuming these plans, and their appetite for alternative investments continues to increase."
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