Sovereign wealth funds pulled $37.8 billion from global stock and bond markets in 2016, data from research firm eVestment showed on Monday, although fourth quarter flows showed a slowdown in the rate of redemptions.
Oil-backed sovereign wealth funds (SWFs) have been under pressure since oil prices tumbled from their mid-2014 highs of $115 a barrel, and 2016 marks their third year of net selling.
However, sovereign investors’ redemptions from third-party fund managers have slowed year-on-year, down from $45.7 billion in 2015. The rate of selling steadily reduced over the course of 2016, with fourth quarter redemptions of $4.9 billion, down from a revised $7.2 billion in the third quarter, eVestment said.
This could be related to a rebound in oil prices from a low of $27 a barrel in January 2016 to around $57 a barrel in December after oil producers reached a deal to cut output.
Peter Laurelli, global head of research at eVestment, which collates data from 4,400 firms managing money on behalf of institutional investors, highlighted the correlation between oil prices and flows.
“If you look at when the price of oil began to fall in 2014, along with the rise in strength of the US dollar, that moment coincides very closely with the shift of SWF flows to external institutional managers from positive to negative,” he said.
Redemptions peaked in the third quarter of 2015 at $20.1 billion, though there have been no net inflows since second quarter 2014.
In fourth quarter 2016, the biggest redemptions came in US equity and global equity mandates, which saw net outflows of $3.3 billion and $1.1 billion respectively. Passively-managed emerging market equity mandates lost $1.4 billion.
US and global equity markets have rallied to record levels since Donald Trump was elected as US president in November, but Laurelli said decisions to redeem assets were not short-term in nature.
Fixed-income mandates, which had attracted a total $2.5 billion of net inflows in the third quarter, switched to net outflows of $13.5 million in the fourth quarter.
Source: Arab News
GMT 19:45 2016 Thursday ,15 December
Sovereign wealth funds face fierce competition for dealsMaintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor