Sovereign Wealth Funds Double Down on Alternative Investments
Synopsis
An industry survey shows sovereign funds are moving further into alternative assets as geopolitical uncertainty, inflation and market risks challenge conventional investment approaches.
With persistent inflation, geopolitical tensions, and changing markets, we’re starting to see a reshaping of long-term investment approaches, as Sovereign Wealth Funds (SWFs) ramp up investment in alternative assets and infrastructure and energy projects. This is highlighted by the Invesco Global Sovereign Asset Management Study 2026.
The annual study, surveying 90 SWFs and 54 central banks with $29 trillion in assets, reveals a noticeable tilt away from public equity and a move towards private markets-including private equity, private credit, and infrastructure.
It’s a snapshot based on investment strategy for some of the largest state-controlled money managers across the globe.
We find 17% SWFs plan to reduce their allocation to public equities, while a further 28-35% are planning to increase allocations into the various private market strategies. Infrastructure remains an area of significant growth as an asset class, and represents a weighty 9% allocation across SWF portfolios, up from just 4% in 2022.
Energy Infrastructure Tops the Capital Allocation charts
Our number one investment theme was energy infrastructure, with 70% of respondents seeing energy security and energy transition as the most promising long-term opportunities driven by increased demand from digital infrastructure, data centres and artificial intelligence.
These findings also tally closely with industry consensus. Global SWF noted sovereign capital grew to a record $60 trillion in 2025, with the United States being a principal recipient of such capital, the key focus areas being AI, digital infrastructure, and data centers. Growth continues in Australia too in inflows of capital as sovereign assets into renewable energy, infrastructure and critical minerals (long duration, well-established policy environment).
Many of the large SWFs including Norwegian, Singapore, UAE, and Saudi Arabia, continue to build out exposure across both traditional and alternative assets.
Reserve Diversification Continues as Dollar under Pressure
Beyond portfolio structure changes, SWFs also report a broadening of their diversification of reserve assets. Sixty-one per cent think increasing U.S. Government debt poses a long-term risk to the dollar’s position as the world’s premier reserve currency, up from only 20% in the 2024 study. One in four respondents (under 25%) also believe the dollar will be a less dominant reserve currency in five years time.
Geopolitical tensions are also driving changes in reserve assets, with about one third of central banks considering increasing their gold holdings – with some now looking at their exposure to U.S. Custodied assets and financial infrastructure.
The outlook for investors overall is portfolio construction geared towards greater inflation, geopolitical fragmentation and concentration in the financial markets, concluded Benjamin Jones, Head of Research, Invesco.
Source: Bloomberg
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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