Global Sovereign & Public Funds Roundtable 2023
[i3] Sovereign & Public Funds Roundtable 2023 | Investment Innovation Institute

Global Sovereign & Public Funds Roundtable 2023

2 November 2023
11am AEDT | Online Anywhere

A year ago, high inflation was a novel phenomenon, with uncertainty about its persistence. However, despite falling, inflation is likely to remain elevated compared to the previous decade due to:

  • Supply chain disruptions and restructurings in response to the pandemic and Ukraine conflict,
  • Demographic shifts as baby boomers retire, leading to tight labour markets in developed countries,
  • “Greenflation” stemming from climate change and decarbonisation goals and initiatives.

 

Invesco Study on Sovereign Funds

Based on findings from the 11th annual Invesco Global Sovereign Asset Management Study 2023, this roundtable will examine how sovereign investors are navigating an altered macroeconomic environment, marked by persistent inflation and higher real interest rates.

We explore 3 themes highlighted in the study, which captured the views of 142 chief investment officers, heads of asset classes and senior portfolio strategists from 85 sovereign wealth funds and 57 central banks. Collectively, these institutions manage approximately US$21 trillion in assets.

Theme 1: Building Portfolios in the New Macro Environment

The first theme explores this change, spotlighting the impacts on portfolio construction and asset allocation.

There is an increased affinity for fixed income assets, including private debt, and heightened interest in emerging markets, believed to offer potential benefits in a higher-rate environment.

Among the emerging markets, sovereign investors have turned their interest to India.

Theme 2: Finding Value in Private Assets

Theme 2 explores sovereign funds’ approach towards private assets, such as real estate, infrastructure and private equity.

Despite market volatility, these alternative investments retain their allure. However, a pricing adjustment has underscored performance inconsistencies, prompting more discerning investment strategies. These strategies prioritise identifying top-tier managers and the most enticing transactions.

Infrastructure, particularly renewable energy generation and distribution, emerges as a prominent sector.

Theme 3: Accelerating the Energy Transition

Building on the above findings, theme 3 explores how sovereign investors are helping catalyse the energy transition.

The current energy crisis has intensified the focus on establishing secure, sustainable energy supply chains. Sovereign wealth funds prioritise direct investments in green infrastructure, while central banks are gradually increasing allocations to green bonds.