Global sovereign wealth fund assets jumped 16% in the past 12 months to $4.62 trillion, with private equity assets in North America attracting special interest, reveals new research.
According to the alternative investments research group Preqin, 57%, invest into private equity, 80% of which is done through pooled funds and 20% directly.
SWFs are also using their scale in the specialist sector, noted the researcher.
"Larger SWFs are more likely to invest in the asset class than their smaller counterparts: 83% of those with over $250bn in assets under management invest in private equity compared to 25% of those with less than $1 billion."
"North America-focused investments are the most sought after, with 76% of SWFs having a preference for investments in the region. Seventy two per cent seek exposure to Europe, and 62% are keen on Asia-focused investments," they added.
Buy-out vehicles are the most popular fund structure, accounting for 79% of the SWFs exposed to private equity. Venture funds are the next most popular fund type, with 59% expressing an interest in funds of this type.
Almost one-third of SWFs using pooled managers use multi-manager arrangements, noted Preqin.
While the US and Canada are where most of the favoured private equity projects are domiciled, nearly three-quarters of SWFs seeking the exposure are based in Asia or the Middle East and North Africa (MENA), highlighting how the petro dollar economies are increasingly integrated into the North American economies.
"Sovereign wealth funds have a continued interest in private equity and many believe the asset class offers favourable long-term investment opportunities," said Alex Jones, managing editor of 2012 Preqin Sovereign Wealth Fund Review.
This investment is part of their push to greater portfolio diversification across both strategy assets and geography and this trend is expected to continue, he said.
According Rainmaker, Australia's de facto SWF the Future Fund, holds only about 5% of its FUM in private equity instead showing a preference for hedge funds to gain its alternatives exposure.