Middle East sovereign wealth funds (SWFs) are fundamentally reshaping their investment strategies, moving aggressively into private markets in anticipation of a more challenging economic decade ahead. According to a new report from global investment management firm Invesco, regional funds are significantly outpacing their global counterparts in identifying private assets as a primary engine for long-term growth.
Quick Facts
- 100% of regional SWFs expect the next decade to be more challenging.
- 70% plan to increase infrastructure allocations in the next 12 months.
- 88% of Middle East sovereign investors already use AI in their processes.
A Strategic Shift to Private Assets
The 14th annual Global Sovereign Asset Management Study highlights a clear pivot by the region’s financial heavyweights. While 65% of SWFs globally look to private markets for returns, the appetite in the Middle East is substantially higher. Infrastructure is the main target, with 70% of the region’s funds planning to increase their allocations to this sector over the next year.
This strategic reallocation is also reflected in the use of financial instruments. While a third of regional SWFs use exchange-traded funds (ETFs) for tactical asset allocation and liquidity, 43% of the region’s central banks are using ETFs for strategic, long-term exposure—a figure notably higher than the global average of 31%.
Bracing for a Volatile Decade
The shift is driven by a stark outlook: a full 100% of Middle East SWFs believe the next ten years will be more difficult than the last two, a sharp contrast to the 69% of global SWFs who share this view. This has led to a focus on portfolio resilience and key thematic priorities.
Energy security remains a top concern, cited by 89% of regional SWFs as a primary investment priority, compared to 80% globally.
“Sovereign investors in the Middle East are taking a highly pragmatic approach to a more uncertain world,” said Josette Rizk, Head of Middle East & Africa at Invesco. “While resilience is not yet as deeply embedded as in some global peers, it is rapidly becoming a core consideration in how portfolios are built and managed.”
Rizk added, “These investors are not stepping back from risk but are becoming more deliberate in how they take it, with a clear focus on building portfolios that can withstand a wider range of outcomes.”
All In on Artificial Intelligence
The region’s sovereign investors are unanimously bullish on artificial intelligence. All surveyed Middle East SWFs view AI as a transformative technology with a multi-decade impact, compared to 77% globally. They pinpoint AI infrastructure and semiconductors as particularly attractive long-term investment themes.
In a telling geopolitical signal, regional investors overwhelmingly see the US as best positioned to lead AI development, with none identifying China as the frontrunner.
This conviction translates directly into practice. An impressive 88% of Middle East sovereign investors already use AI in their investment processes, far exceeding the global average of 69%. The region’s SWFs are leading this adoption at 100%, compared to 75% among central banks.
About Invesco
Invesco is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. The company has a presence in more than 20 countries and provides a comprehensive range of active, passive, and alternative investment capabilities.
Source: Zawya
