JEDDAH: A number of sovereign wealth funds (SWF) are lowering their allocation from bonds to more risky liquid assets, such as direct investment in companies, according to the Sovereign Wealth Institute website. "Their position sizes have increased and they are now providing more capital for public and private companies across various industries," it said. SWFs have made generous profits from direct investment numerous industries such as natural resources, materials, real estate, financial institutions, and energy. SWFs are state-owned investment funds composed of financial assets such as stocks, bonds, and real estate. There is growing collaboration among SWFs, also, whether by investing in initial public offerings, private equity, or even venture capital projects. Private backroom deals with favorable investment terms are enhancing returns, taking the focus away from trading shares in public markets. In general, investors are relying less on public markets for returns. Abu Dhabi Investment Authority is the largest SWF in the world, with estimated assets of $627 billion. It is low-ranked in terms of transparency. Sama Foreign Holdings, a Saudi fund, comes in third. The Qatar Investment Authority, which has the task of placing this excess cash, is emerging as one of the highest-profile global investors, thanks to the urgency with which it needs to place its excess hydrocarbon receipts to generate income in a post-gas era. Its investments have spanned strategic assets, from German carmaker VW/Porsche to the Brazilian unit of Spanish bank Santander, as well as trophy assets such as Harrods department store. About three-quarters of the QIA's funds are earmarked for Qatar Holding, the direct investment arm run by Ahmed Al-Sayed that grabs the limelight with its direct stakes in banks and other companies worldwide. While its Qatari Diar unit focuses on real estate, the QIA also looks after other assets for other state-linked organizations, such as the Qatar Foundation.
