I am delighted to welcome you to our seventh annual study of sovereign investors. The scale and shape of this study has grown over time and now represents the views and opinions of 139 chief investment officers, heads of asset classes and senior portfolio strategists (68 sovereign funds and 71 central banks). These investors are responsible for managing over US$20 trillion in assets (as of March 2019).

The five key themes in this year’s report seek to build on the findings from previous years’ studies by analysing long-term trends as well as uncovering new insights.

Interviews took place between January and March 2019 following a turbulent fourth quarter for asset markets in 2018. This was top of mind for respondents and is evident in theme 01. Public market volatility has combined with late cycle concerns to lead sovereigns to defend, diversify and explore new opportunities.

In theme 02, we explore the challenges of sovereign asset owner scale, which has become a real issue for some large funds. Size has distinct benefits in accessing certain opportunities, but even those are often heavily contested, forcing large sovereigns to look at increasingly specialised areas.

Theme 03 finds that environmental, social and governance (ESG) adoption continues to gain traction with both sovereigns and central banks. Understanding has improved of how to derive value from its application to portfolios, particularly among a group of sovereigns with long histories of ESG adoption. The ‘E’ has become the focus, with ‘G’ initiatives considered to be assumed or complete, often the initial outcomes of ESG implementation.

Technology increasingly occupies the time of sovereigns as they oversee their investment programmes. Theme 04 looks at sovereigns as both technology investors and technology users, and finds a sophisticated approach to technology investing which is often not matched by the application of technology within the sovereign organisation.

A focus on central banks in theme 05 concludes this year’s study. Central banks are seeking liquidity and safety, shifting away from the US dollar and other traditional reserve currencies towards a more diversified set of reserve currencies including the renminbi. A minority of central banks have made large additions of gold. At the same time these investors are facing pressure to cover their costs, which they are finding increasingly difficult in an environment of dwindling yields.

I hope the key themes in this year’s report provide you with relevant and informative insights into this evolving and important group of investors. If you would like to discuss any of the findings or indeed have any questions, please do get in touch.

Alexander Millar

Alexander Millar

Head of EMEA Institutional


+44 1491 416180