Sovereign Funds Allocate More Assets To Alternatives

Sovereign investors have been allocating more of their funds to alternatives and away from core asset classes to improve returns in a challenging investment environment, but they are also moving toward in-house and co-investment opportunities. Together, these two trends give portfolio managers the chance to increase volumes, but possibly at the expense of margins, explain Nick Tolchard and Desmond Ng, co-chairs of Invesco Ltd. (NYSE:IVZ)’s Global Sovereign Group in a recent study.

Structural factors for sovereign investors

“There are both temporary and structural factors driving the growth of alternatives for sovereign investors and the structural factors make this theme particularly important,” they write. “For the asset management industry, this presents an opportunity to export its international capabilities even...