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CAPITAL MARKETS

Sovereign funds lost $1 trillion in 2022 – but where?

A new study attempts to quantify the damage of 2022 for sovereign wealth funds. Beneath the numbers are tumultuous levels of deal activity, as funds tried to take advantage and position for the long term.

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Photo: iStock

We all know 2022 was a miserable year for sovereign wealth funds, as it was for all diversified institutional investors. But just how bad was it?

The first attempt at assessing the carnage has come from the Global SWF research group. Its report, released on New Year’s Day, asserts that 2022 was the first year ever that sovereign wealth funds shrank in value.

It’s not an easy figure to pin down. The reporting timeframe of major funds such as those in China and Abu Dhabi means that accurate figures can be the best part of a year in arrears, and plenty of funds (again including Abu Dhabi) don’t publish assets under management (AUM) anyway. But Global SWF estimates that there was an almost $1 trillion hit to sovereign funds and $1.3 trillion for public pension funds.

Specifically, Global SWF estimates that sovereign wealth AUM fell from $11.5 trillion in 2021 to $10.6 trillion in 2022, and public pension funds from $22.1 trillion to $20.8 trillion, amounting to a $2.2