The majority of the world’s most effective sovereign wealth funds (SWFs) come from the Asia Pacific region, according to Global SWF’s 2022 GSR Scoreboard, which assesses the governance, sustainability and resilience progress by state-owned investors globally.
In terms of assets under management (AUM), Temasek is the largest SWF with $283 billion AUM, according to Global SWF, which has been ranking state-owned investors on factors such as responsible investing since 2020.
The Hong Kong Monetary Authority (which scored 88%), Abu Dhabi’s Mubadala and the Korea Investment Corporation (KIC), both of which scored 84%, also made their way to the list of 10 most efficiently managed SWFs.
10 SWFs with the highest GSR scores
When it comes to pension funds, Japan’s $1.7 trillion Government Pension Investment Fund ranked fifth with a score of 92%. It was the only APAC pension fund in the top 10 funds with best practices in governance, sustainability and resilience.
Canada’s CPP, CDPQ and British Columbia Investment Management Corporation, and Dutch pension investor PGGM had the highest score of 96% each.
10 pension funds with the highest GSR scores
The 55 leading state-owned investors, including both SWFs and pension funds, manage a total of $11.7 trillion, per the report.
Some APAC investors have demonstrated significant growth compared with 2021, the report said.
Mubadala, and the Indonesia Investment Authority (INA), for example, have increased their scores by 28%. INA was off to a great start because it had “a lot of information publicly available on its website including audited statements, LP contributions, investments, code of conduct and risk management policy”, the GSR Scoreboard said.
INA’s 2022 score is 60%.
Qatar’s QIA, whose score was up 32% to 56%, “is becoming more transparent and sustainable, as it gets ready to join the club of the world’s largest SWFs”. QIA manages $445 billion in AUM.
“Sovereign investors are making an effort to become more transparent and sustainable; however, resilience is still an evolving concept that will be put to the test again under the current financial environment,” the report noted.
It also pointed out a positive correlation between GSR scores, especially the governance element, and financial returns. The average return for a sovereign investor in the past six years was 7.7%.
State-owned investors with high GSR scores and high returns include NZ Super, Mubadala, AustralianSuper and Korea Investment Corporation from APAC, as well as Western pension funds such as CPP, OMERS and AP-Fonden.
The report indicated that these sovereign investors, under the current environment where inflation is rising, are allocating less to venture capital and more to infrastructure and private debt. “Transparent funds that publish results on a regular basis have shown us the severity of the situation,” it added.
In Q1 2022, Future Fund returned -1.5%, and NZ Super returned -3.7%, while Danish pension fund ATP even returned -13%.
As the scoreboard measures governance, sustainability and resilience factors, it showed that environmental-social-and-governance (ESG) is starting to be seen as a key risk to be tackled.
In this regard, Temasek was highlighted as an example with its “three-pronged approach” of investing in climate-aligned opportunities, enabling carbon-negative solutions, and encouraging decarbonisation efforts in businesses.
In addition to private investments through impact funds such as ABC Impact and Leapfrog Investments, the Singapore state-owned fund last April teamed up with Blackrock to invest in private companies that use technology to reduce carbon emissions.
The mutual partnership, Decarbonisation Partners, aims to launch a series of late-stage venture capital and early growth private equity investment funds, and agreed to invest a combined $600 million in initial capital across the funds.
Most recently, Temasek launched GenZero, an investment platform aimed at accelerating decarbonisation globally.