Big Money’s Betting on Low Interest Rates to Persist

The amount of money sovereign wealth fund command is massive. Norway’s sovereign wealth fund has more than US$954 billion worth of assets. Below, is a list of the top 10 sovereign wealth funds according to SWF Institute:

 

sovereign wealth funds

Source: SWF Institute

Australia’s sovereign wealth fund — the Australian future fund — ranks as the 17th largest, in the world. Yet even when a small sovereign wealth fund decides to shuffle their portfolio around, investors take note. Usually, sovereign wealth funds will make long term investments. Therefore by looking at what these funds are doing, you could identify profitable long term trends.

Where do these mega funds see long term value?

According to BlackRock Inc. [NYSE:BLK], many of these funds are looking to increase their exposure to real estate. As reported by the Australian Financial Review (AFR):

BlackRock’s head of Australian Real Estate Hamish MacDonald says about 60 per cent of pension and sovereign wealth funds are looking to increase their allocation to real estate and that Blackrock itself has started receiving more off-market offers for its commercial property holdings.

Yet it’s not just the big money that wants to move into real estate. The AFR continues:

BlackRock — the world’s largest asset manager — conducted a survey this year of their clients which revealed that 61 per cent of them wanted to increase their allocation to real assets. That percentage was almost three times the preference to increase allocations to equities.

asset allocation changes

 

Running into real assets could be a sign that sovereign wealth fund and other investors are betting on low interest rates to persist. While this means you might not earn much more on you savings for a while, it’s not all that bad. There is a way you could profit from persistently low interest rates. To find out how, click here.

Regards,

Härje Ronngard,

Junior Analyst, Markets & Money


Harje Ronngard is a Junior Analyst at Markets and Money. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.


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