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Sovereign Wealth Fund Competition

Sovereign Wealth Fund Competition

Sovereign Wealth Funds and Hedge Funds Compete for Assets

Sovereign wealth funds, long seen as a valuable investor to private equity and hedge funds, are now starting to compete with alternative funds for investors.  The huge state-owned investment vehicles are looking to manage assets for outside investors, too.  These outside investors include institutional investors like pension funds and endowments, which are major investors in private equity and hedge funds. 
While external money currently accounts for just a small part of total assets of the wealth funds, state investors from Abu Dhabi and Singapore now view clinching mandates from pension funds and family offices as part of their business, putting them in direct competition with private sector managers.
"In the medium term -- a five-year time horizon -- the largest and top-performing multi-strategy funds in the world might well be those run by sovereign wealth funds, and not by the traditional and best known players in the hedge fund space," said Aureliano Gentilini, Lipper's global head of hedge fund research.
Even China Investment Corp (CIC) , a relatively new sovereign fund unlike its Middle East counterparts, is getting into the act through CITIC Capital, which last month raised $925 million for a China buyout fund.  Source

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