Sovereign Wealth Funds Are Back!
18/01/10 09:45
Hi Kids
I'm currently in Singapore working and have met with other traders. It's always a pleasure sharing my experience with others. There are some amazing traders developing over here, and from the feedback we receive, they find our workshop to be the most informative and credible in the region, which is a much appreciated compliment.
The subject of risk management continued to surface throughout the lecture, so i will likely do a free video and make it available shortly after we implement the new course enhancements and the scalping course.
Please stay in touch, as we have more great news coming your way in the next two weeks!
I'm currently in Singapore working and have met with other traders. It's always a pleasure sharing my experience with others. There are some amazing traders developing over here, and from the feedback we receive, they find our workshop to be the most informative and credible in the region, which is a much appreciated compliment.
The subject of risk management continued to surface throughout the lecture, so i will likely do a free video and make it available shortly after we implement the new course enhancements and the scalping course.
Please stay in touch, as we have more great news coming your way in the next two weeks!
Sovereign Wealth Funds are back!
Sovereign wealth funds (SWFs) have come back to the forefront in 2010, as official commentary from various SWFs has spooked currency markets. In a UBS Foreign Exchange Note entitled "The Return Of Sovereign Wealth Funds," dated 12 Jan 2010, Mansoor Mohi-Uddin discusses that while SWFs are set to return to prominence, the direction of the dollar ultimately falls on the shoulders of US asset managers.
Sovereign wealth funds lost influence during the financial crisis as lower oil and collapsing trade hit their sources of assets while plunging markets hurt their portfolios. But with financial markets recovering strongly since March 2009, oil bouncing around $80 a barrel and Asian trade expanding again year-on-year, sovereign wealth funds are back in the spotlight. SWFs are focused on longer-term returns and can generally hold a wider range of currencies and assets, which translates to more diversification versus central bank reserve managers. Recent data shows SWFs favor equities among asset classes and increased allocations to emerging markets, which could lead to further diversification away from the dollar.
But there are two reasons why the headlines from SWFs and the potential for diversification will not be as large a driving force as some investors may think. Even though SWFs can diversify away from dollars, they still hold a fair amount of assets in USDs and the problems in the Eurozone are reducing the attractiveness of the EUR as a USD alternative. They could diversify into GBP and JPY, for example, but those currencies carry their own issues. But more importantly, the portfolios of both sovereign wealth funds and central bank reserve managers globally remain dwarfed by those of US asset managers. According to our estimates sovereign wealth funds and central banks are together responsible for over $10trn of assets. US asset managers, however, are the largest holders of dollar-based portfolios, currently managing $37trn of assets according to data from the Federal Reserve, and thus will be the larger driving force behind the dollar's future direction.
Source, UBS, Bloomberg