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Sovereign wealth funds continue to take stakes in companies, report reveals Moving away from trading and towards company ownership, sovereign wealth funds continue to grow and play an increasing role in numerous industries
A number of sovereign wealth funds are lowering their allocation from bonds to more risky liquid assets, such as direct investment in companies, according to the Sovereign Wealth Institute website. "Their position sizes have increased and they are now providing more capital for public and private companies across various industries," the site reports. Sovereign wealth funds (SWF) have made generous profits from direct investment numerous industries such as natural resources, materials, real estate, financial institutions, and energy. SWFs are state-owned investment funds composed of financial assets such as stocks, bonds, and real estate. There is growing collaboration among SWFs, also, whether by investing in initial public offerings, private equity, or even venture capital projects. Private backroom deals with favourable investment terms are enhancing returns, taking the focus away from trading shares in public markets. In general, investors are relying less on public markets for returns. Abu Dhabi Investment Authority is the largest SWF in the world, with estimated assets of $627 billion. It is low-ranked in terms of transparency. Sama Foreign Holdings, a Saudi fund, comes in third.