Nearly two-thirds of sovereign wealth funds (SWFs) are invested in real assets, according to Preqin.
Preqin said 62% of SWFs now invested in both real estate and infrastructure.
The funds’ overall assets under management is up to $6.51trn, according to Preqin’s 2016 Sovereign Wealth Fund Review.
The report shows that, despite global market volatility and low oil prices, the AUM of SWFs globally increased by $200bn over the previous year to reach $6.51trn in March.
Preqin said growth was driven by non-commodity funds, which added $290bn in assets, while hydrocarbon funds lost $10bn.
Other commodities funds saw their AUM more than halved from $130bn to $50bn.
Selina Sy, premium publications manager at Preqin, said recent macroeconomic conditions had posed a particular set of challenges to SWFs, with falling commodities prices affecting the source of funding for many funds, and global equity markets remaining volatile.
“Given that many SWFs are established by oil-producing nations, it is perhaps unsurprising the rate of increase in assets has slowed,” Sy said.
“Several of these funds have been fulfilling their function by providing for budget deficits in more challenging economic periods.”
Preqin said 68% of all SWFs had been launched since 2000.
In the past six years, 14 sovereign wealth funds have been launched, with Bolivia and the Philippines reportedly in discussions to launch funds soon.
A rising proportion of SWFs are now actively investing in alternatives, although fixed income and public equity investments still comprise the largest proportion of most portfolios.
The Norway Government Pension Fund Global remains the largest SWF globally, holding $835bn in AUM, up from $818bn since March last year.
The fund accounts for 13% of the total AUM of all SWFs.
SWFs based in the Middle East and Asia represent 76% of all industry capital, and 45% of the number of funds.
North America accounts for just 3% of aggregate SWF capital, while 14% of funds are based in the emerging region of Africa.
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