Saudi Arabia’s Wealth Funds Leads Global Investments, Expects to Expand to $18tn by 2030

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Sovereign Wealth Fund Institute placed Saudi Arabia’s PIF, which manages $925 billion, sixth in the world.

Saudi Arabia’s Sovereign Wealth Funds (SWFs) dominate the global investment landscape as it expands the total assets under management to $12 trillion by the end of 2024 and is expected to reach $18 trillion by 2030, a 50% increase from the end of 2024.

The latest report shows that the region, home to six of the top ten sovereign funds, now holds 40% of the global sovereign wealth fund assets.

The study aligns with the most recent assessment of the Sovereign Wealth Fund Institute, which places Saudi Arabia’s Public Investment Fund (PIF), which manages $925 billion, sixth in the world.

Over the past two years, the Sovereign Wealth Fund (SWF) industry has expanded significantly, with new SWFs opening up globally, high-profile acquisitions by existing firms, and asset value hitting new highs.

The Abu Dhabi Investment Authority is the largest in the Gulf, with $1.05 trillion, followed by the Kuwait Investment Authority, with $1.02 trillion, and the Qatar Investment Authority, with $526 billion.

Julie Kassab, SWF head at Deloitte Middle East, stated that the Gulf region remains the centre of sovereign wealth fund activity, with its players driving innovation in investment strategies and operational excellence.

She witnessed all the funds expand their geographic reach and significantly improve their internal capabilities, setting new benchmarks for the industry for performance and governance.

The report highlighted that the Gulf SWF continues to invest aggressively, allocating $82 billion in 2023 and $55 billion in the first nine months of 2024.

The report identifies five key companies influencing the investment environment: QIA, Abu Dhabi Developmental Holding Co., Mubadala of Abu Dhabi, ADIA, and PIF of Saudi Arabia.

The total number of sovereign wealth funds has increased threefold since 2000, from 160 to 170, with 13 new funds created between 2020 and 2023.

The report highlights that funds are fast growing in developing countries outside of conventional Western markets, which is one of the key reasons for changing the regional SWF landscape.

Gulf SWF made Asia a strategic priority as many have opened offices in Asia-Pacific regions and increased their allocations in high-growth markets like China and India.

Gulf Wealth funds were highly interested in China, investing $9.5 billion in Asian companies during the first nine months of 2024.  

Abu Dhabi Investment Authority and Kuwait Investment Authority were among the top 10 shareholders in Chinese A-share listed companies.

The report noted this is a strategic opportunity as Western investors reduce their exposure, enabling Middle Eastern funds to take advantage of their strong economic and political relationship with Beijing.

Gulf wealth funds are also looking for fresh opportunities in Africa, especially in the mining industry.

Saudi Arabia and the United Arab Emirates (UAE) are showing interest in Africa by planning to either directly invest in high-risk extractive industries in Africa or buy shares from multinational mining companies.

This shift aligns with the emergence of new investment vehicles like the “royal private office,” which now holds $500 billion in assets.

Wealth funds in the Gulf face increasing pressure to give high returns and improve their competitiveness by focusing on internal performance, risk management, and investment management.

The report showed that the regional wealth fund is becoming more initiative, showing more willingness to divest, being more vocal at the board level, and better reporting from portfolio companies.

These funds compete fiercely for human resources due to the increased need for skilled domestic talent.

Gulf SWFs have employed 9000 specialists. They have offered alluring packages for senior professionals, especially those who worked at established funds like Canada’s Maple Eight or Singapore’s Temasek.

Gulf countries are also changing the way they handle assets. It has led to new and domestic funds co-investing with international partners rather than competing against established regional companies.

The report notes that geopolitical uncertainties and price fluctuations might create challenges in the future, but they also establish new ways and efficiency in fund management techniques.