Sovereign wealth funds take back their money

The most desirable clients for asset managers in the Middle East were the source of persistent redemptions last year.

According to data from research firm eVestment, sovereign wealth funds from around the world withdrew a net $38 billion from their asset managers in 2016.

Although the findings do not separate out sovereign funds by region, it is likely that Middle Eastern funds were a substantial contributor to the total. The same research found that, overall, investors domiciled in the Middle East and Africa took back a net $72 billion from their asset managers over the year.

“Sovereign wealth funds were net sellers for 2016 as a whole,” said the report by eVestment, which added that foundations and endowments had also been net sellers during the year.

Sovereign wealth funds in the Middle East, which typically exist to invest surplus wealth from oil and gas exports, have been under pressure since the oil price feel steeply in 2014.

The value of the Saudi Arabian Monetary Agency’s investments in foreign securities fell to $360 billion at the end of last year, according to the agency’s latest monthly report, a decline of roughly $40 billion compared with December 2015.

Governments in Saudi Arabia and elsewhere are believed to be selling sovereign wealth funds’ assets to balance their budgets and meet infrastructure spending commitments.

The price of a barrel of Brent crude is currently about $56, compared with a price in excess of $100 before mid-2014.

©2017 funds global mena

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