(MENAFN - Khaleej Times) About 51 per cent of sovereign investors increased new exposure to real estate in 2013 and 29 per cent to private equity relative to the total portfoli
Emerging markets are the preferred destination for new capital inflow from the middle east sovereigns and other counterparts globally and the uae will be a major beneficiary because of its safe-haven status in the region according to top official of invesco middle east and co-chair of invesco’s global sovereign group.
The leading independent global investment management firm which released its second annual invesco global sovereign asset management study on wednesday said emerging markets — including latin america africa and china — continue to be the winners of new global sovereign flow despite a fundamental preference relative to the total portfolio for developed markets.
The study which was conducted amongst more than 50 individual sovereign investors across the globe representing 5.7 trillion2 of assets said sovereign investors particularly those in the middle east continue to favour alternative investments with allocations increasing across all major alterative asset classes including real estate and private equity on a net respondent view basis.
“given alternatives underperformed during the period in which their allocations increased it is clear that a strategic asset allocation strategy is driving sovereign investors to alternatives rather than tactical allocation” nick tolchard head of invesco middle east and co-chair of invesco’s global sovereign group said at the media briefing.
He said the expected net increase in new funding this year is another key factor that explains this preference for alternatives driven by increasing country surpluses and strong support from governments for their sovereign unds. however the main reason is that many sovereign investors especially those with assets in excess of 50 billion are seeing it take time to deploy assets in alternatives and emerging markets and are yet to reach the asset allocation targets set five years ago.
“sovereign investors are likely to take on a major role in shaping the global economy” he said adding that almost half (46 per cent) of sovereign investors (54 per cent of middle east sovereign investors) expect to see an increase in new funding in 2014 beyond the levels seen in 2013 with clear implications on global capital flow.
“about 51 per cent of sovereign investors increased new exposure to real estate in 2013 and 29 per cent to private equity relative to the total portfolio” he said.
Tolchard said sovereign investors expect to increase new allocations across all major alternative asset classes in 2014 based on net responses — real estate private equity infrastructure hedge funds and commodities — relative to their 2013 asset placements. amongst middle east sovereigns this includes global private equity (83 per cent in 2014 compared to 60 per cent in 2013) and global real estate (100 per cent in 2014 compared to 67 per cent in 2013) all on a net respondent view basis.
Referring to the 2013 study he said the flow of new global sovereign assets continues to reach emerging markets with new allocations to latin america africa china india and emerging asia are expected to increase again in 2014. “this is also a trend amongst middle east sovereign investors with 67 per cent expected to increase allocations to latin america in 2014 (40 per cent in 2013) 50 per cent to africa (40 per cent in 2013) and 60 per cent to india (43 per cent in 2013) all on a net respondent view.