Are Sovereign Wealth Funds Suave Tactical Opportunistic Investors?

It appears not. As a cohort they are largely benchmark huggers with varying degrees of core-satellite active-passive combinations. To further answer this, I examined SWF activity during multiple periods of extended market dislocation as well as economic and financial crisis. In examining history, one period stands out however, where 12 SWFs were very active in distressed deals deploying huge amounts of capital. This was during the global financial crisis of 2007-08 where these deep pools of permanent capital participated extensively in bank recapitalizations, for which they were well rewarded. I have reconstructed these transactions as well a provided the market reaction by way of augmenting flavor.

At ActiveAllocator.com we continue to monitor deal activity as well as research notable historic transactions for lessons.

Author: Sameer_Jain

Partner. Sameer Jain is founder of FinTech ActiveAllocator.com, the world’s first portal that seamlessly integrates traditional, illiquid and alternative investments within portfolios. Prior to this he was Chief Economist & Managing Director at AR Capital. Before that he headed Investment Content & Strategy at UBS Alternative Investments. At UBS, he served as a non-voting member of the Wealth Management Research investment committee, and as a capital allocator was responsible for all illiquid investing including fund manager selection and due diligence across the platform. Prior to UBS he headed product development & investment research at Citigroup Alternative Investments that managed over $75 billion of alternative investments across hedge funds, managed futures, private equity, credit structures, infrastructure and real estate. Here he led a team that developed proprietary models for portfolio strategy and asset allocation with alternative investments, provided investment support and research to pension plans, sovereign wealth funds, endowments as well as internal clients including Citi Private Bank. Before this he was with Cambridge Alternative Investments and SunGard (System Access) where he travelled to over 80 countries for work across Europe, Asia, Middle-East and Africa. He has written over 30 academic and practitioner articles on alternative investments with thousands of downloads at SSRN, presented at over a hundred industry conferences and has coauthored a book, Active Equity Management. Mr. Jain has multiple degrees in engineering, management, public administration and policy and is a graduate of Massachusetts Institute of Technology and Harvard University. He is a recipient of the Alfred Sloan Fellowship and subsequently was a Fellow of Public Policy and Management at the Harvard Kennedy School of Government for a year. He holds Series 7 and 66 securities licenses.

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