Invesco: Middle East Sovereign Wealth Funds Lean Heavily into Private Markets and AI Infrastructure
Middle East sovereign wealth funds (SWFs) are increasingly targeting private markets to generate long-term returns, with local enthusiasm for the asset class significantly outpacing the global average of 65%. According to Invesco’s 14th annual Global Sovereign Asset Management Study, infrastructure is the primary beneficiary of this trend, as 70% of regional SWFs intend to boost their allocations to the sector over the coming year.
The report, which surveyed 144 institutions overseeing approximately $29 trillion in assets, revealed that 100% of Middle Eastern SWFs anticipate a more volatile and difficult macroeconomic environment over the next decade—far higher than the global SWF average of 69%. This outlook is driving a comprehensive reshaping of portfolio strategies, with energy security emerging as a dominant investment priority for nearly 89% of regional funds. While only 31% of Middle Eastern SWFs formally designate “resilience” as a core investment priority compared to 48% globally, Josette Rizk, Head of Middle East & Africa at Invesco, noted that regional investors are taking a highly pragmatic approach. Rather than avoiding risk, they are deploying sophisticated risk management tools to build deliberate portfolios capable of handling a broader spectrum of global outcomes.
Divergent ETF Strategies and Unanimous Backing for AI
The study also highlighted distinct shifts in how regional institutions manage liquidity and long-term exposure. Around one-third of Middle Eastern SWFs utilize exchange-traded funds (ETFs) primarily for tactical asset allocation and quick liquidity management in fast-moving markets. Conversely, 43% of regional central banks deploy ETFs—significantly above the global central bank average of 31%—utilizing them for strategic, long-term market exposure.
Artificial intelligence (AI) has emerged as a major point of convergence for regional wealth managers, with 100% of surveyed Middle East SWFs viewing AI as a transformative, multi-decade technology, compared to 77% globally. These funds are heavily prioritizing investments in AI infrastructure and semiconductors, overwhelmingly identifying the United States as the clear leader in AI development while bypassing China. Furthermore, AI adoption within internal operations is exceptionally high in the region; 88% of Middle East sovereign investors utilize AI in their investment workflows, led by a 100% adoption rate among SWFs and 75% among central banks. Finally, the region’s central banks are actively adjusting to global uncertainties, with nearly 70% expecting their total reserves to expand over the next two years and 40% planning to diversify further, primarily into equities.
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