Sovereign Wealth Funds on Pace to Quadruple in Size, Triggering Wave of Hiring
Sovereign wealth funds, investment vehicles funded by a country’s foreign reserves, have made a record $33.3 billion in acquisitions this year, according to Dow Jones Financial News. The government-led funds are accelerating their purchases of stakes in western companies amid the credit crunch. In fact, this week the Abu Dhabi Investment Authority purchased a $7.5 billion stake in Citigroup. The IMF says that sovereign wealth funds could quadruple in size by 2012 thanks to soaring oil prices and huge growth in emerging markets. Executive search firm, A.E. Feldman, says the trend is likely to trigger a wave of hiring. Opportunities include risk management jobs, compliance manager jobs and fund manager jobs.
Sovereign funds have existed at least since the 1950s, but their total size worldwide has increased dramatically over the past 10 to 15 years, according to the International Monetary Fund (IMF). In 1990, sovereign funds probably held, at most, $500 billion. The IMF says the current total is an estimated $2-$3 trillion and, based on the likely trajectory of current accounts, the funds could reach $10 trillion in five years. Financial News reports that Morgan Stanley research shows that there are 29 countries with sovereign wealth funds. Oil and gas resources fund 73% of them, primarily from emerging markets. The only developed countries with these funds are Norway, Canada and the U.S., thanks to oil in Alaska. The IMF says that about one-third of sovereign wealth funds’ total assets are held by Asian and Pacific countries, including Australia, China, and Singapore.
Today, sovereign wealth funds are experiencing staggering growth. Dow Jones Financial News reports that the funds’ acquisitions grew roughly $8 billion since this time last year. What’s more, five year ago, they managed less than $1 billion of purchases, according Dealogic.
This growth is expected to continue, with Russia and South Korea’s sovereign wealth funds paving the road. According to Financial News, Stephen Jen, Head of Currency Research at Morgan Stanley, says that South Korea’s $20 billion fund and Russia’s $24 billion oil fund, could grow to $100 billion each in five years. What’s driving the growth? Financial News reports that Morgan Stanley believes the funds have mitigated the fallout of the credit crunch on global equity markets and will continue to serve as a prop for the next 60 years.
Thus, it should come as no surprise that sovereign wealth funds are looking to expand their ranks. And when it comes to finding the right candidates, overseas experience and education are among the key requirements. Sovereign wealth funds are recruiting globally due to a shortage of local professionals with experience investing abroad. Opportunities range from risk analysts to portfolio managers and public relations officers.
