The Middle East has some of the world’s fastest-growing economies, and the region’s gulf countries continue to reap enormous profits from oil and gas exports.
A significant portion of these unexpected profits are channeled into the enormous sovereign wealth funds of many of these countries.
For those who are unfamiliar with the term, a sovereign wealth fund is a type of state-owned investment fund that, similar to a supercharged mutual fund, has the ability to invest in a wide range of assets, including shares, bonds, real estate, infrastructure, and precious metals, with the goal of increasing the wealth of the state and generating returns over time.
Nearly $4 trillion in assets are held by the Middle East’s top 10 sovereign wealth funds today.
The sovereign wealth funds of the Middle East have the potential to play a significant role in the economy of the world as a whole.
The Abu Dhabi Investment Authority (ADIA) invests on the government’s behalf. Both the Emirate of Abu Dhabi and the United Arab Emirates have their capitals in Abu Dhabi. Despite having a population of only 1.5 million, the ADIA has assets worth US$709 billion as of the beginning of 2023.
It invests globally in more than two dozen asset classes and subcategories, according to the investment authority. In 1976, it was established.
The Kuwait Investment Authority is the world’s oldest sovereign wealth fund, having been established in 1953. It is now one of the largest as well.
Its mission is to “achieve a long-term investment return on the financial reserves entrusted by the State of Kuwait to the Kuwait Investment Authority, providing an alternative to oil reserves, which would enable Kuwait’s future generations to face the uncertainties ahead with greater confidence,” the Authority declares publicly.
In 2023, Saudi Arabia is expected to surpass India as the world’s fastest-growing economy. With over $600 billion in assets under management, the PIF is the country’s largest sovereign wealth fund.
Along with Saudi Giga-Projects, it invests in global stocks, or “strategic global investments,” which include infrastructure, energy, and other real assets in other countries.
Some of the most well-known investments made by the fund are the Saudi Giga-Projects.
SAMA Foreign Holdings is the second-largest sovereign wealth fund in Saudi Arabia. The Saudi Central Bank, also referred to as SAMA, is in charge of the investment vehicle.
SAMA Foreign Holdings invests in stocks, bonds, and banknotes due to its lower risk appetite.
The state of Qatar established the Qatar Investment Authority in 2005 with the intention of safeguarding and expanding the nation’s wealth into the foreseeable future.
It has an investment portfolio that covers all of the major global markets, asset classes, and industries.
Qatar’s petroleum and gas industries, as well as the thriving startup, business, and tourism sectors have contributed to some of the world’s strongest economic growth in recent years.
The main investment arm of the Dubai Government is the Investment Corporation of Dubai. The United Arab Emirates’ most populous city is Dubai.
When compared to numerous other sovereign wealth funds, the corporation’s portfolio is more concentrated. There are 7 segments to its portfolio, including:
The Abu Dhabi Government invests on behalf of the Mubadal Investment Company, which is the second-largest sovereign wealth fund.
It invests primarily in private investments, stocks, and alternatives, with investments in more than 50 countries across the world.
The list of the Middle East’s top 10 largest sovereign wealth funds also includes a third Abu Dhabi fund.
The Abu Dhabi Developmental Holding Company has approximately $160 billion in assets. It primarily makes investments in major Abu Dhabi businesses.
The United Arab Emirates invests on behalf of the Emirates Investment Authority.
Major equity stakes in Middle Eastern and North African telecommunications companies Etisalat and Du are among its most notable assets. Additionally, it has given significant investment mandates to international asset managers globally.
As of January 2023, the Oman Investment Authority, the country’s sovereign wealth fund, had approximately $20 billion under management.
According to the Authority, its investments span 40 countries and fall into two categories:
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