Sovereign wealth funds (SWF) in the Gulf region are experiencing significant growth, with the United Arab Emirates (UAE) and Saudi Arabia leading this expansion. A recent report from Deloitte Middle East highlights that total assets under management for global SWFs reached $12 trillion by the end of 2024 and are projected to rise to $18 trillion by 2030. This growth reflects massive investment outlays and a transformation of the global financial order driven by Gulf nations.

The report indicates that Gulf SWFs control approximately 40 percent of global assets and include six of the ten largest funds worldwide by Assets Under Management (AUM). The number of SWFs globally has tripled since 2000, now totaling around 160 to 170 funds, with 13 new entities established between 2020 and 2023. In 2023 alone, Gulf SWFs deployed $82 billion, followed by an additional $55 billion in the first nine months of 2024.

The major players in this sector include the Abu Dhabi Investment Authority (ADIA), Mubadala, Abu Dhabi Developmental Holding Company, Saudi Arabia’s Public Investment Fund (PIF), and the Qatar Investment Authority (QIA). Julie Kassab, Sovereign Wealth Fund Leader at Deloitte Middle East, noted that the Gulf region is a hub for SWF activity, where major funds are innovating their investment strategies and improving operational excellence.

Deloitte’s report also emphasizes a strategic shift among Gulf funds towards high-growth economies outside traditional Western markets, particularly in Asia. Gulf funds are increasingly establishing new offices in the Asia-Pacific region and boosting their investments in countries like China and India. In the year ending September 2024, investments in China alone were estimated at $9.5 billion, positioning Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA) among the top shareholders in Chinese A-Share listed firms.

Additionally, the report highlights Africa as a growing area of interest, especially in the mining sector. This year, the UAE and Saudi Arabia have shown a willingness to invest in high-risk extractive ventures in Africa, both directly and through partnerships with multinational mining firms. The emergence of new investment vehicles, such as “Royal Private Offices,” which control about $500 billion in assets, reflects a broader trend towards diversification.

As competition intensifies, Gulf SWFs are focusing on enhancing performance, risk oversight, and investment management to deliver better returns. They are becoming more proactive by considering divestments and demanding improved reporting from portfolio companies. With around 9,000 professionals employed across their operations, Gulf funds are also competing for national talent by offering attractive packages to experienced professionals from established funds like Singapore’s Temasek.

Deloitte warns of an increasing trend toward protectionism, particularly in developing economies, as governments reassess their strategies regarding strategic assets. This shift has led to the creation of new domestically focused funds aimed at co-investing alongside international players rather than competing with them. Despite potential challenges such as geopolitical uncertainties and commodity price fluctuations, the outlook remains optimistic, potentially driving efficiency and innovation in fund management practices.