LONDON — The world’s sovereign wealth funds are turning to active fund management and investments in China, while central banks are diversifying reserves to weather a volatile global environment, an Invesco survey of sovereign funds and central banks managing $27 trillion in assets showed.
Still, the dollar reigns supreme, with the bulk of central banks saying it would take two decades to dethrone it – if ever – as the top reserve currency despite growing concerns.
“Institutions with greater than $100 billion – so the pretty large institutions – those are the ones that were most interested in moving more to active management,” said Rod Ringrow, Invesco’s head of official institutions.
Whereas funds liked passive management in predictable market conditions, predictable was “no longer the case,” he added. “I think that frames the whole approach… in this move to active management.”
On average, wealth funds made returns of 9.4 percent last year, the joint second-best performance in the survey’s history.
Nevertheless, market volatility and de-globalisation concerns have spiked – and over the 10-year horizon, big worries centre around climate change and rising sovereign debt levels.
Over 70 percent of the 58 central banks polled for example now believe rising US debt is negatively impacting the dollar’s long-term outlook.
