Despite strong attention focused on allocation to alternatives such as private equity and real estate by Asian SWFs, their allocations to equities continued to dominate throughout 2013, the research house said.
“This is not unlike other institutional investors who are looking to diversify their assets and seek higher returns. The developed market rallies in 2013 affirmed the high equity allocation of Asian SWFs,” said Cerulli analyst Evonne Gan.
Asian SWFs participate in a relatively high level of active trading through investments and divestments.
“An increasing asset base, challenging investment environment, and the pressure of seeking alpha mean managers that are top performers, both large and for niche strategies, have opportunities for additional top-ups and new allocations,” said Yoon Ng, Asia research director.
Citing data from Temasek Holdings’ latest annual report, Cerulli noted 70% of its investments are held in listed securities. GIC, another Singapore government investment firm, increased its equity allocation to 48% in March 2014 from 38% in March 2009.
Korea Investment Corporation’s exposure to equities has also been increasing steadily, to 48.5% in 2013 from 41.8% in 2010.
Recently, Japan’s $1.1trn Government Pension Investment Fund also revised its policy asset mix, enhancing target allocations for the separate categories of domestic and foreign equities to 25% from 12%. GPIF said exposure to local fixed income bonds would drop to 35% from 60%.
