Business
Sovereign wealth funds pour $132 billion into US, emerging markets take a hit
The report highlighted that sovereign wealth funds now manage record assets of $15 trillion, contributing to a historic $60 trillion in combined assets under management across state owned investors, public pension funds and central banks. Overall, sovereign wealth fund investments grew by 35% to $179.3 billion in 2025.
Emerging Markets Slide
Emerging markets, particularly China, India, Indonesia and Saudi Arabia, were the biggest losers, receiving only 15% of total sovereign investments, a 28% drop from 2024. Global SWF managing director Diego Lopez noted that while these economies performed well, the flow of capital shifted sharply towards the US.Private credit investors, however, have started pivoting back to emerging markets in search of stronger returns and more attractive project structures. The report also noted that all 11 new sovereign funds launched in 2025 originated in emerging markets. With oil prices under pressure, Lopez predicted that 2026 could be a challenging year for oil dependent sovereign funds, while sectors like natural gas and metals, including copper, may drive new capital flows.
The US Pulling Power Remains Strong
The US retained its appeal as the destination of choice for global sovereign and pension funds. Investments focused heavily on digital infrastructure, data centres and AI companies, reflecting a change in paradigm for recipient countries. Lopez emphasised that the $132 billion figure does not include the estimated $2.2 trillion already held in the “Magnificent 7” US stocks, Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla.
High profile pledges from Gulf countries also reinforced the US’s investment magnetism. Saudi Arabia committed to $600 billion in US investments during President Trump’s visit, with Crown Prince Mohammed bin Salman pledging to increase it to $1 trillion. Abu Dhabi and Qatar also made large scale commitments, promising $1.4 trillion and $500 billion, respectively, over the coming decade.Top spenders in 2025 included Saudi Arabia’s Public Investment Fund with $36.2 billion, largely for its takeover of Electronic Arts, and Abu Dhabi’s Mubadala, which invested a record $32.7 billion. Other major investors included Canada’s CPP, La Caisse and Singapore’s GIC. Gulf funds such as PIF, Mubadala and Qatar Investment Authority also emerged as key backers of Paramount Skydance’s bid for Warner Bros Discovery.
The report underscores the US’s enduring ability to attract sovereign capital even amid global economic uncertainty and highlights a clear divergence in investment flows between the US and emerging markets.
Also Read | Mutual funds increase cash allocation by over Rs 14,500 crore in 2025; 5 new AMCs join in
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
