Middle East Sovereign Wealth Funds Investing in Alternatives

In an effort to generate better returns for their shareholders, Middle Eastern Sovereign Wealth Funds (SWFs) are looking to actively invest in alternative investments.

Looking forward, 2015 is set to be an active year for SWFs in the region. -  Ashish Dave, KPMG Partner and Head of Private Equity and Sovereign Wealth Funds

According to officials, the areas of direct investments for SWFs are generally chosen with a focus on investing in infrastructure, private equity, and real estate investments.

While the majority of SWFs continue to deploy their funds in bonds and global equities, a relatively low interest rate environment, continually evolving investment strategies and a growing appetite for alternative asset classes are resulting in a shift away from what has typically been a passive investment philosophy. - Vikas Papriwal, KPMG Partner and Head of Markets

Middle Eastern investors look for alternative investments.

According to the KPMG report, the region’s SWFs are taking advantage of their scale and long-term investment strategies to allocate more of their assets to sectors such as hospitality, industry, logistics and retail. The SWFs also continued to pour in capital to fund infrastructure investment, where yields are higher for investors. In addition, the Middle East SWFs are increasingly shifting away from European markets due to the economic conditions there and have redirected a portion of funds to the Middle East market.

In November 2014, QIA’s chief executive Ahmed Al Sayed said that the fund is looking to invest between $15 billion and $20 billion over the next five years into Asian market investments. He specifically noted that China’s property, infrastructure and healthcare sectors are of interest to the QIA for future investment holdings.

According to the KPMG, Global SWFs currently have approximately $5 trillion in assets under management (AUM). Of this amount, the SWFs in the GCC (most notably ADIA, currently the world’s third largest SWF as per KPMG’s estimations) account for approximately 40 percent of global SWFs by AUM.

Doing Thorough Research Determines The Best Investments

As more and more investors move away from investment firms, money managers and brokers, and begin to plan their own portfolio and investment strategy independently, the responsibility of conducting in-depth market research to identify profitable and appealing investment options; has shifted to the individual investor. Nowadays, the endless hours of sifting through reports and reviews has become an important part of what private investors must do consistently, especially if they hope to succeed in today's cool economic climate. Failing to properly investigate opportunities and recognize investing risks, reduces the chances that an investor will make an educated and confident choice, when it comes time to invest.

For many investors, investment research begins on the Internet. With such an abundance of (sometimes conflicting) material written on blogs and web pages and in social media networks, it will be necessary for investment-seekers to dig deep to find the truth about investments and uncover the most profitable opportunities for investment. Posing questions in well-established forums or communities and fostering the helpful advice of recognized analysts and industry experts, is one of the most effective methods for investors to determine which offerings can fulfill their financial needs, and accommodate their tolerance for risk. Learning from the wisdom and experience of others (for free) through investor reviews and testimonials, is a benefit that was not readily available to the investment community, 10 to 15 years ago.

Given the ample resources at the disposal of today's savvy modern investor, it is much easier for investors to review the investments before choosing which ones to pursue further. This also provides a valuable opportunity for investment-seekers to compile a comprehensive list of questions for representatives to answer, if/when the investor decides to contact the company for more detailed information and (possibly) makes an investment. This approach promotes transparency and has repeatedly proven to produce the information that apprehensive investors need to set the record straight and make confident and educated decisions about whether or not to invest.

Timeless Tips For Investing Success in Challenging Markets

Looking back on my days as a novice investor, I can remember listening to much more experienced investors brag and/or complain endlessly. I would sit (or stand) quietly and collect bits of their valuable knowledge, insight and experience. Some of those tips I learned years ago have proven to be timeless. They are just as applicable in today's challenging markets, as they were many years ago.
I would like to take a moment to share some of those insights with you.

Do your research: Only you know the types of investments that are right for you and your risk factors and personal preferences. It is therefore important to do your own research when considering investment types. No one, not even a broker or a financial analyst, can tell you how you feel about certain things. Therefore, doing your own research really helps you understand what you are comfortable with.

Stay on top of your investments: If you choose to work with a broker or asset manager, the odds are you will receive periodical updates on the performance of your investments. This is good. It is important to constantly be aware of where your money is, and how it is performing. If you are managing your own investments, it is even more important to track these things, as you are completely responsible for your own financial success.

Stay on top of your industry: Your investments most likely fall into one main industry (manufacturing, shipping, real estate, etc.) and therefore it is important that you understand your investment and where that specific industry is going. Stay aware of what major causes and effects are taking place.

Get insight anywhere you can: Every investor worth a grain of salt is always looking for any insight he/she can get. It is part of the process of staying on top of your investments. Reading, researching, and getting the opinion of other investors, are all great ways to gain insight.

Work with an international broker if investing outside of your country: Each country and market comes with its own set of rules and regulations. If you are considering investing into emerging markets or a different country all together, it would be a wise decision to find a broker that is in that country and is comfortable with the region's rules and regulations.

Have a spread out portfolio: Do not invest everything in one specific investment. Spreading out your portfolio allows you to lower your overall risk and should increase your long-term return potential (generally speaking). Consider introducing alternative investment strategies if you are heavy in stock, bonds, and/or real estate.

Much of what the tips above speak to is the collecting and analyzing information. In today's world, performing in-depth research is not nearly as difficult as it was a decade ago. Also, take advantage of all of the latest innovations to communicate with the people who are helping you invest and maintain your portfolio.