Global Sovereign & Public Funds Roundtable 2024
[i3] Sovereign & Public Funds Roundtable

Global Sovereign & Public Funds Roundtable 2024

11 September 2024
11am AEST or 9am SGT | Online Anywhere

The Changing Investment Regime

The 12th edition of the Invesco Global Sovereign Asset Management Study gathered insights and perspectives from 140 senior investment professionals, including chief investment officers, heads of asset classes and lead portfolio strategists, representing 83 sovereign wealth funds and 57 central banks. Together, these organisations oversee approximately US$22 trillion in assets under management.

Key Research Themes

  • Shifting investment landscapes drives changing allocations

Amid an unpredictable macro environment, sovereign investors are recalibrating their portfolios, pivoting towards equities, private credit, and some hedge funds. Emerging markets are gaining traction, with funds adopting a selective approach and prioritising India.

  • The rise of private credit: a compelling opportunity

Private credit is increasingly attractive to sovereign wealth funds (SWFs), with many investing through funds and direct deals. SWFs favour developed markets but are also exploring emerging markets, while balancing defensive and opportunistic strategies to navigate the competitive landscape.

  • The AI awakening: sovereign investors embrace the future

Sovereign investors are increasingly adopting AI in their investment processes, recognising its potential to become an essential tool. While challenges exist, funds are investing in training and partnerships to overcome barriers.

  • On the threshold of transition

ESG adoption continues to rise among central banks, while SWFs refine their approach as the market matures. Climate risk is recognised as a material factor, with investors aligning portfolios with global climate goals. Engagement and allocation to renewables are preferred over complete divestment to drive the energy transition.

Constructing Portfolios: Risk, Return & Resilience

In partnership with Invesco, we’re pleased to convene the annual global sovereign and public funds roundtable to discuss the portfolio implications of these themes.

Given the somewhat inter-relatedness of the issues, we will attempt to frame them into 3 practical dimensions for portfolio construction

1. Risk

Inflation risk remains stubbornly unabated, while climate risk still needs to be addressed. Geopolitical tensions are increasingly challenging and complex, as US debt levels continue at dizzyingly high levels.

2. Return

The energy transition presents many unique investment opportunities, albeit in the long term. Likewise, the advent of AI has supercharged growth assets, particularly equities. The de-banking movement continues to fuel the rise of private debt, while India stands out as an attractive EM proposition.

3. Resilience

In addition to investible opportunities, the AI revolution has also facilitated process efficiencies, to enable better decision-making and hence investment outcomes. Notwithstanding the debate on whether the 60/40 portfolio is dead, investors need to recognise the changing regime, marked by increased volatility and uncertainty.

An active handle on asset allocation is required, taking into consideration the multitude of new and idiosyncratic risks, as well as the courage the embrace disruption and new opportunities to build a diversified portfolio.

We look forward to a robust discussion on these issues.