Real Estate Overtakes Commodities as Top Sovereign Asset

By: Klaus Wille

Real estate topped the list of sovereign wealth funds’ investments last year, overtaking commodities and financial services, according to Institutional Investor’s Sovereign Wealth Center.

Properties made up 26 percent of investments by these funds last year, up from 14 percent in 2011, according to the center’s report on investment trends by the funds released today. That’s followed by financial services and commodities, each accounting for 23 percent, down from about 30 percent a year earlier, it said.

State funds have increased investments in alternative assets including real estate and private equity after monetary policy easing lowered the prospects for bond returns and added to the volatility of stocks.

“Sovereign wealth funds will continue to diversify their portfolios into so-called alternative assets, responding to macroeconomic risks by adopting niche alternative strategies and making small adjustments to their asset allocations,” Barbary said. The asset composition in 2013 will be similar to last year and the investment trend is a “new normal” for these funds, she added.

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