As oil and gas prices rise, sovereign wealth funds, which own about $3 trillion in assets, may almost triple their investments in the next five years, State Street Corp. said, according to Bloomberg News.
That could lead to an additional $5 trillion of sovereign investments by 2013, according to “The Growing Role of Sovereign Wealth Funds'' issued by State Street, the world's biggest money manager for institutions. The funds' assets will grow 17% a year according to ``conservative'' estimates, State Street said.
``Some sovereign wealth funds owe their existence, and most owe their size, to the explosive growth that has recently occurred in official sector assets,'' said John Nugee, head of State Street's official institutions group, and the main author of the report. ``Commodities, oil in particular, are one key to this growth.''
The state-sponsored pools invested $58 billion in the first quarter, according to a report by consulting firm Monitor Group.
Record oil prices have swelled the coffers
of producer nations including countries in the Middle East, Russia and Norway. Meanwhile, China's runaway trade surplus has pushed its foreign reserves higher, leading last year to the creation of the $200 billion
China Investment Corp.
Sovereign funds will likely have increasing power to drive change and corporate restructuring at companies, especially financial services firms, State Street said.
