Invesco Global Sovereign Asset Management Study 2024

Amid an unpredictable macro environment, sovereign investors are recalibrating their portfolios, pivoting towards equities, private credit, and hedge funds. Emerging markets are gaining traction, with funds adopting a selective approach and prioritising India.

Private credit is increasingly attractive to sovereign wealth funds (SWFs), with many investing through funds and direct deals. SWFs favour developed markets but are also exploring emerging markets, while balancing defensive and opportunistic strategies to navigate the competitive landscape.

Sovereign investors are increasingly adopting AI in their investment processes, recognising its potential to become an essential tool. While challenges exist, funds are investing in training and partnerships to overcome barriers.

ESG adoption continues to rise among central banks, while SWFs refine their approach as the market matures. Climate risk is recognised as a material factor, with investors aligning portfolios with global climate goals. Engagement and allocation to renewables are preferred over complete divestment to drive the energy transition.

Amid global uncertainties, central banks are strengthening reserves. Gold’s appeal is growing due to concerns about weaponisation of the dollar and rising US debt levels. Allocations to emerging markets are increasing as central banks seek to enhance returns and mitigate risks.