Global government-owned funds will increasingly look to buddy-up on investment deals, according to New Zealand Superannuation Fund (NZS) chief, Adrian Orr.
Speaking at the International Forum of Sovereign Wealth Funds (IFSWF) ninth annual conference in the Kazakhstan capital of Astana last week, Orr said as “it makes sense to for like-minded peers with aligned interest to pool resources and build capabilities” as funds sought further diversification.
“We have seen [IFSWF] members co-invest in one-off direct investments such utilities and increasingly we are starting to see strategic co-investment partnerships, such as those Russia has with China,” Orr told the Astana crowd.
The NZS chief, appointed IFSWF chair in October 2015, said the “three Cs” mantra of ‘compare, collaborate and co-invest’ set out a clear strategic direction for the sovereign wealth fund (SWF) community.
“This model of comparing, collaborating and co-investing is absolutely critical to the future of sovereign wealth funds,” Orr said. “If we get it right we create a powerful force of economic good, shifting investment horizons beyond the short-term profit focus, to long-term sustainable wealth creation.”
He said the “privileged” long-term stance of SWFs implied two key responsibilities including building sound fund structures able to “weather turmoil and take advantage of good prospects as they arise”.
“Our second imperative is to consider and even to lead on relevant parts of the global agenda and investment best practice,” Orr said.
For example, he said SWFs were well-placed to take global leadership on the investment implications of climate change. In August NZS implemented a carbon-reduction strategy that saw it shift some $950 million in assets while redrawing the $35 billion fund’s reference portfolio.
“Through this year, there has been a concerted effort to understand both risk and the management of [climate change] in a more holistic sense,” the NZS chief told the Astana audience.
Orr said IFSWF would launch a new database of SWFs and their underlying investments next year.
“Sourced from public datasets, we believe that this will become the gold standard for SWF data,” he said. “When it is launched next year, it will put the IFSWF front and centre of public discussions and comparisons of SWF investments.”
The organisation also revamped its structure this month moving to a single nine-member Advisory Committee from the previous three sub-committees.
In a release, IFSWF says the Advisory Committee – currently open for nominations – “provides transparent, non-binding, advice and support to the Secretariat and Board”.
Formed in 2009, IFSWF now boasts 33 member funds from 32 jurisdictions, representing about half of SWFs by number and 80 per cent of assets managed by government-owned investment funds globally.
Recent new members including the Fondo de Ahorro de Panamá, the Turkiye Wealth Fund, and the Nauru Intergenerational Trust Fund, which officially signed up this month.