6 of today’s savviest sovereign wealth funds

Many sovereign wealth funds (SWFs) have continued to increase their allocations to the private markets—and are now major allocators to private capital funds. Critically important to the current and future wellbeing of their home countries, these institutions are growing in sophistication as they seek to offer stability, savings and local development. Take a closer look at the six select SWFs we have highlighted here that serve as fascinating examples of how different funds are being managed to achieve their goals.

Norway Government Pension Fund Global

Norges Bank Investment Management oversees Norway’s $1 trillion sovereign wealth fund according to the management mandate set by the Ministry of Finance. The fund—which is the largest of its kind in the world—prefers an allocation that heavily emphasizes publicly traded investments, despite a trend among many SWFs to increase private market allocations. Transparency and public disclosure (as well as low fees) are also priorities for the massive vehicle as it seeks to secure wealth for the Scandinavian country and its citizens. Still, the fund does allocate up to 7% of its assets to pursue private real estate and private companies that intend on publicly listing.

The fund is viewed as a bellwether for many other SWFs—similar to how other public pensions view CalPERS in the US. An inclusion of PE and VC, even a small allocation to just managed funds, could cause other SWFs sitting on the sideline to change course as well. We expect Norway’s fund will eventually allocate to PE as the asset class becomes more entrenched in institutional portfolios and the long-term costs of foregoing the strategy become clearer.

Abu Dhabi Investment Authority (ADIA) and Mubadala

Combined, these two Abu Dhabi-based SWFs have a nearly $1 trillion capital pool that is funded by excess oil & gas income. Similar to other funds that rely on capital from natural resource revenues, these funds aim to stimulate the economy in place of dwindling reserves.

ADIA is an especially sophisticated allocator with in-house operations spanning multiple asset classes and plans to continue building out its in-house capabilities. Further, the fund accepts a higher level of calculated investment risk than similarly sized SWFs; doubling its direct deals in the last three years and increasing private markets investing. Mubadala is also a sophisticated actor, participating in direct deals, allocating to the private markets and growing the local economy through strategic sovereign investment partnerships.

Alaska Permanent Fund Corporation

We view Alaska Permanent Fund as one of the savviest SWFs in the world. The $65.3 billion fund is financed by oil & gas revenue for the benefit of future generations of Alaskans. Despite being less than one tenth the size of ADIA, the fund is just as sophisticated, if not more so.

The long-term orientation of Alaska Permanent and others enables the pursuit of novel and innovative investment strategies that may have longer durations than typical private market strategies. Alaska Permanent’s indefinite time horizon affords the fund opportunities to take highly calculated bets farther out on the risk/reward spectrum, often producing returns that outperform its peers.

Singapore’s GIC Private Limited and Temasek Holdings

The Government of Singapore Investment Corporation (GIC) and Temasek are two of Singapore’s SWFs, splitting over $800 billion between them. Each has its own goals and ways of operating, but both invest for the future with an expectation of paying out in the near term. In fact, nearly half of each year’s returns from these funds supplement the Singaporean government’s annual budget.

GIC’s goal as a savings fund is to strengthen government purchasing power and cash reserves, while investing outside of Singapore. Temasek, on the other hand, is a development fund that invests in homegrown companies to stimulate the local economy, holding significant SGD-denominated assets. Further, GIC has become a prolific PE investor, teaming up with PE firms on multibillion-dollar deals (including Refinitiv and Genesee & Wyoming)—while Temasek has shown a penchant for engaging in direct VC deals (including DoorDash and Magic Leap).

Another difference is that GIC manages funds on behalf of Singapore’s Ministry of Finance (MoF), while Temasek owns the assets on its balance sheet, though the MoF is the sole shareholder in Temasek. As these SWFs realize the gains from directly sourcing deals and bypassing typical GP fees, we believe it is likely that other SWFs of a similar statute will follow.

Want to learn more about sovereign wealth funds? Download our analyst note that covers different fund types and key players in more detail.