Sovereign wealth funds are beginning to look more like pension funds - with added controversy and potentially more clout. Shayla Walmsley reports.

Time was, every time a sovereign wealth fund (SWF) acquired an airport, it was alleged to be one small but devious step away from the national treasure. The sometimes protectionist, sometimes xenophobic outcries were silenced for a while: shortage of capital tends to have that effect. But simultaneous controversies across a number of its investments have increased speculation that the Qatari Investment Authority (QIA) and some of its peers may be adopting an edgier, more aggressive, investment approach.

Will that include real estate and infrastructure? On the face of it, there is no reason why not. Between 2005 and 2011, real estate was the second most targeted sector for direct investment among SWFs, accounting for $54.5bn (€43.5bn) - second only to the financial sector, which accounted for $164.9bn.  Infrastructure, including energy and utilities, came third, according to the Sovereign Wealth Fund Institute.

So far, speculation over the divergence between bold and cautious funds has pitted QIA - and its subsidiaries Qatari Holding and Qatari Diar - against the rest. That is over simplistic. Preqin research suggests 85% of SWFs invest directly in real estate, with an average allocation of 7.5%. Those from the Middle East and Asia invest most, probably because they have been at it longer. Abu Dhabi Investment Authority (ADIA) has invested most ($47bn), followed by QIA ($25.6bn), GIC ($24.7bn), CIC ($20.4bn) and the Kuwait Investment Authority ($9.7bn). All things being equal, it is not inconceivable that ADIA, GIC and CIC could follow QIA's lead.

At the same time, if there is a shift towards bigger, bolder investment in real estate, it will only come from one, or possibly a couple of, SWFs. It is hard to imagine hitherto cautious SWFs developing a rampant risk appetite. The Financial Times recently speculated that moving away from benchmark-style investing could mean the Norwegian oil fund (NBIM) upping its risk. NBIM plans to increase its direct from 0.3%, where it is now, to 5%. It is hardly a plan for world domination.

Although NBIM's spokesman does not demur from the analysis, he seems bemused by its conclusion that the fund will significantly change its risk profile. "There are no big changes," he says.

Arguably, SWFs are only doing what pension funds have done before them. PwC real estate partner John Forbes reckons the increase in direct investment was inevitable for SWFs, as for other investors, as they build up their in-house expertise. GIC and ADIA both started out investing in property funds but took a more sophisticated approach as they gained experience. "Now they're doing more complicated things with real estate," Forbes says. "It's more about maturity than a fundamental shift in appetite."

It is also about SWFs' demand, along with other long-term investors, for more control over their investments - hence the increase in the number investing directly since 2011. "They're looking to have discretion and control over their investments," says Preqin real estate manager Andrew Moylan. NBIM and QIA, both shareholders in extractive Glencore, recently joined forces to oppose a merger with miner Xstrata - in this case, after the oil fund had built up its holding in the previous weeks.

They are even, like large pension funds, looking to invest with like-minded peers. Hence last week's announcement that Qatar Holding had acquired 20% of airport operator BAA from, inter alia, GIC, putting it among shareholders already including NBIM.

Forbes believes the SWF label is not particularly useful - that it makes more sense to speak of long-term investors, rather than drawing an artificial distinction between SWFs and, say, pension funds. He points out that NBIM is an extension of the Treasury, and that some Middle East investment bodies are "more like family offices on a grand scale - and in some cases the distinction between the ruling family and the state is somewhat blurred. From an investment perspective, it doesn't tell you much."