Sovereign wealth funds pulled $16.3 billion from public market investment strategies, largely equities, in the fourth quarter, the most in almost four years, driven largely by redemptions, according to data and research firm eVestment.
The move followed a year in which some funds, including those from Norway, Azerbaijan and Kazakhstan, planned withdrawals to help their governments cope with the coronavirus crisis.
Net outflows from equity strategies managed by third-party fund managers reached $18.5 billion in the final three months of 2020, eVestment data showed.
Global equity markets closed 2020 around record highs after a stimulus-charged rebound helped stocks surge more than 60% from their March lows.
Across all asset classes, net outflows from long-only managers handling sovereign wealth investments were $16.3 billion, the largest amount since the first quarter of 2017, the data showed.
The net outflows identified within eVestment’s data were driven largely by redemptions from passive equities, noted eVestment’s senior research analyst Mike Cho.
“We did see evidence from last year where export earnings were down and the need for additional expenditure by some governments meant some sovereign wealth funds having to tap into some of the more liquid parts of their portfolio,” said Rod Ringrow, head of official institutions at asset manager Invesco.
“We’re not seeing any immediate pressures since then and a lot of clients are looking to add new asset classes to their investment portfolios.”
There were some “isolated bright spots” in the eVestment data, with positive net flows for active global equity strategies and active emerging market large capitalisation equity funds, said Cho.