scholarly journals INVESTMENT STRATEGIES OF INSTITUTIONAL INVESTORS: SOVEREIGN WEALTH FUNDS VS ENDOWMENTS

2013 ◽  
pp. 117-126
Author(s):  
E. S. Biryukov
Keyword(s):  
Real Estate ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Private Equity ◽  
Investment Strategy ◽  
High Yield ◽  
Income Volatility ◽  
Sovereign Wealth Funds ◽  
The World

The paper considers two main original approaches to investing the assets of institutional investors (the total amount of their assets in the world is about 100 trillion dollars) – the one of Norway's sovereign wealth fund Global and approach of Yale's endowment fund. Fund Global with assets of $ 716 billion dollars is the largest institutional investor in the world, its strategy is based on the assumption that markets are efficient and their long-term growth lies in the balance of investment in stocks , bonds, and , since more recent time - in real estate. Financiers of Yale in the 1990s revolutionized the approach to investment, firstly, by reducing the proportion of stocks and bonds in favor of private equity and real estate, and secondly , by shift from investments in the domestic market to foreign markets. Not all institutional investors are ready to follow these strategies because of the risk of negative returns in times of crises, but in the medium- and long-term, these approaches allow to beat inflation. For example, Yale's endowment has grown since 1985 to 2012 from 1.6 to 19 billion dollars, and high yield allows to transmit 1 billion dollars (!) to the budget of the university annually. Endowment funds are one of the key sources of revenues of leading American universities. Analysis of the investment policy of endowment funds and sovereign wealth funds shows that fundamental changes in the concept of investing began to occur since the late 1980s - early 1990s . Institutional investors of both these types ceased to focus on conservative instruments - bonds and deposits , and use other options: Global - stocks , Yale – private equity , hedge funds, real estate investments , etc. With the expand of the spectrum of instruments in which the funds are invested the income volatility increases either, and therefore the institutional investors should be both transparent and explain to the public the motives of investment strategy changes.

Reframing Finance

2017 ◽  
Author(s):  
Ashby Monk ◽  
Rajiv Sharma ◽  
Duncan L. Sinclair
Keyword(s):  
Real Estate ◽  
Private Equity ◽  
Green Energy ◽  
Service Firms ◽  
Sovereign Wealth Funds ◽  
Traditional System ◽  
Financial Capitalism

The role of financial intermediaries has come under close scrutiny in recent times as many of the practices of these service firms have been exposed for their opaque, rent-seeking and dishonest behavior. This book questions the traditional system of Financial Capitalism by examining how beneficiary organizations such as pension funds, sovereign wealth funds, endowments and foundations can reduce the inefficiencies of intermediaries in the savings-investment channel. This book argues that the large pools of long-term capital held in beneficiary organizations has not been mobilized efficiently enough into the capital-intensive long-term projects such as infrastructure, green energy, agriculture, private equity and real estate development. In particular, the book examines a new ‘collaborative’ form of investing that a large number of beneficiary organizations have started to embark on in order to address the problem of mainstream financial intermediation and achieve their long-term investment objectives. The book conceptualizes the ‘collaborative’ model of investment, drawing upon economic sociology, and emphasizes the importance for investors to build their social capital. By providing case study exemplars of collaborative vehicles such as co-investment platforms, joint ventures, and platform companies that invest in infrastructure, agriculture, private equity and real estate, the book provides useful insights for how long-term investment management might be shaped in the future.

New Vehicles to Drive the Collaborative Model

2017 ◽  
Author(s):  
Ashby Monk ◽  
Rajiv Sharma ◽  
Duncan L. Sinclair
Keyword(s):  
Real Estate ◽  
Institutional Investors ◽  
Joint Ventures ◽  
Theoretical Explanation ◽  
Collaborative Model ◽  
Actual Case ◽  
The World ◽  
Set Up

Chapter 4 presents actual case study examples of the vehicles that have been set up and represent the collaborative model. Whereas earlier chapters provided the theoretical explanation and validation for the collaborative model, Chapter 4 provides detailed explanations of eight investor-led co-investment platforms, joint ventures, and platform companies. The vehicles illustrated represent innovative ways for institutional investors to pool capital together to invest around the world into long-term assets such as infrastructure, agriculture, and real estate. The case studies are designed to outline how they came about and what the challenges were in their setup. The chapter is supplemented with a database that identifies over a hundred collaborative investment vehicles that have been set up mostly in the last few years. This chapter will help provide key lessons on strategy, governance, and structural issues as more of these vehicles are setup in the future.

The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
William L. Megginson ◽  
Diego Lopez ◽  
Asif I. Malik
Keyword(s):  
Hedge Funds ◽  
Private Equity ◽  
Academic Research ◽  
Pension Funds ◽  
State Ownership ◽  
Public Pension ◽  
Annual Review ◽  
Publication Date ◽  
New Governance ◽  
Sovereign Wealth Funds

State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and are among the most important private equity investors, and they are key investors in other alternative asset investments such as real estate, infrastructure, and hedge funds. SOIs are also leaders in promoting environmental, social, and governance policies and corporate social responsibility policies in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds, public pension funds, and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience Scoreboard for SOIs and survey research examining their role in promoting good corporate governance. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

scholarly journals The Rise of Institutional Investors

2019 ◽  
Author(s):  
Jan Fichtner
Keyword(s):  
Mutual Funds ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Private Equity ◽  
Short Term ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Important Position ◽  
State Street ◽  
Asset Managers

During the last decades, institutional investors gained an ever more important position as managers of assets and owners of corporations. By demanding (short-term) shareholder value, some of them have driven the financialization of corporations and of the financial sector itself. This chapter first characterizes the specific roles that private equity funds, hedge funds, and mutual funds have played in this development. It then moves on to focus on one group of institutional investors that is rapidly becoming a pivotal factor for corporate control in many countries – the “Big Three” large passive asset managers BlackRock, Vanguard and State Street.

Sovereign Wealth Funds and Private Equity

2017 ◽  
Author(s):  
Mike Wright ◽  
Kevin Amess
Keyword(s):  
Private Equity ◽  
Investment Strategy ◽  
Fixed Income ◽  
Direct Control ◽  
Sovereign Wealth Funds ◽  
Different Types ◽  
Equity Funds ◽  
Institutional Capital ◽  
Expansion Stage ◽  
Public Equity

While the vast majority of SWFs invest in public equity and fixed income vehicles, about half invest in private equity (PE). PE includes several different types of funds investing in companies at different stages of development. Some 78% of SWFs investing in PE invest in buyouts stage funds; 72% in venture capital stage funds; 66% in growth stage funds, while 56% invest in funds investing in companies at the expansion stage. Only 41% have a strategy to invest in distressed company funds while 38% invest in the secondaries funds market. Some 14% of institutional capital raised by PE equity funds in 2015 came from sovereign wealth. This chapter argues that SWF investment in PE funds is more likely to be part of an investment strategy that seeks to maximize returns because investment in PE funds does not afford the SWF direct control over firms bought using PE funds.

Reframing Finance

2017 ◽  
Author(s):  
Gordon L. Clark ◽  
Ashby H. B. Monk
Keyword(s):  
Institutional Investors ◽  
Organizational Innovation ◽  
The World

In the concluding chapter, Chapter 11, we summarize the various methods that asset-owning investors might consider applying when they are endeavouring to catalyse change and innovate prudently. They can achieve this by viewing the world through the lens of those institutional investors who search for organizational innovation and reconfiguration to meet their long-term objectives in a challenging world. The objectives of Chapter 11, and indeed of the whole book, have been to remind investors of their core functions and to show them how they can best take charge of their futures. This chapter lays down plans for how asset owners might mobilize their innovative ideas and, indeed, persuade their boards to resource them appropriately.

scholarly journals Financial geography II: Financial geographies of housing and real estate

2018 ◽  
Vol 43 (2) ◽  
pp. 376-387 ◽  
Author(s):  
Manuel B. Aalbers
Keyword(s):  
Real Estate ◽  
Hedge Funds ◽  
Private Equity ◽  
Rental Housing ◽  
International Investment ◽  
Commercial Real Estate ◽  
Housing Associations ◽  
Residential Housing ◽  
Mortgage Securitization ◽  
Financial Geography

Geographers have started studying residential (housing) and commercial real estate (offices, retail, leisure) at the intersection of financial and urban geographies to understand how the built environment – chunky and spatially fixed – has been turned into a (quasi-)financial asset – ‘unitized’ and liquid – through a range of regulatory and socio-technical changes and constructions. The financialization of real estate is not limited to the rise in household debt, mortgage securitization and international investment in office markets, but increasingly also affects rental housing: private equity, hedge funds and REITs buy up large portfolios of social and private rented housing, while housing associations use derivatives and other financial instruments. This report surveys the most recent research on finance, real estate and housing.

scholarly journals Institutional Investors and Infrastructure Investing

2021 ◽  
Author(s):  
Aleksandar Andonov ◽  
Roman Kräussl ◽  
Joshua Rauh
Keyword(s):  
Institutional Investors ◽  
Private Equity ◽  
Cash Flows ◽  
Finite Horizon ◽  
Equity Investments ◽  
Over Time ◽  
Private Equity Investments

Abstract Institutional investors expect infrastructure to deliver long-term stable returns but gain exposure to infrastructure predominantly through finite-horizon closed private funds. The cash flows delivered by infrastructure funds display similar volatility and cyclicality as other private equity investments, and their performance similarly depends on quick deal exits. Despite weak risk-adjusted performance and failure to match the supposed characteristics of infrastructure assets, closed funds have received more commitments over time, particularly from public investors. Public institutional investors perform worse than private institutional investors. ESG preferences and regulations explain 25%–40% of their increased allocation to infrastructure and 30% of their underperformance.

Global Imbalances in the World Economy

2008 ◽  
pp. 51-61
Author(s):  
A. Apokin
Keyword(s):  
World Economy ◽  
Trade Deficit ◽  
Global Imbalances ◽  
Sovereign Wealth Funds ◽  
The Us ◽  
The World

The paper reviews an evolution of key political and economic hypotheses in the literature from 1993 to 2007 related to emergence, stability and correction mechanisms of the so-called "global imbalances" which are connected to the US trade deficit. The special "counterweighting" role of sovereign wealth funds in possible mechanisms of global imbalances’ correction in medium- and long-term perspective is considered.

Co-Investments of Sovereign Wealth Funds in Private Equity

2017 ◽  
Author(s):  
Joseph A. McCahery ◽  
F. Alexander de Roode
Keyword(s):  
Institutional Investors ◽  
Private Equity ◽  
Sovereign Wealth Funds ◽  
Corporate Venturing ◽  
Developed Markets ◽  
Strong Interest ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Portfolio Investments

Direct investments are the preferred vehicle for large institutional investors to have control over their portfolio investments. This chapter studies the deal structure of direct investments by sovereign wealth funds (SWFs) in private equity transactions. Its analyses of direct investments are based on data from Global Corporate Venturing. It finds that SWFs shift from investing in private equity funds to originating and co-investing together with private equity funds in deals. The choice for co-investment affects deal size, risk-bearing, fees and returns. Overall, results of research conducted for this chapter show the strong interest of SWFs in direct investments in developed markets.

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