SWF Radar StateStreet

Asian Investor reports that, “Sovereign wealth funds are expected to take up index investing in order to achieve broad diversification in equities, with direct or strategic investments becoming relatively fewer as a proportion of rapidly growing assets under management. So concludes State Street Global Advisors, which is a leading provider of index funds to institutional investors.”

Thomson Reuters reports that, “Sovereign wealth funds will likely plough more money into capital-starved financial firms if they see long-term value, said a regional executive on Wednesday at one of the world’s biggest institutional money managers [Hon Cheung, regional director of the Official Institutions Group in Asia at State Street Global Advisors].”

Al Watan Daily writes that, “Sovereign wealth funds risk keeping poor management in place in the firms they invest in if they give up their shareholder rights in response to fears about their excessive influence, a senior State Street official said. John Nugee, who heads State Street Global Advisors’ Official Institutions Group, [told Reuters on Tuesday that] stateÙ€-owned funds had shied away from active corporate governance after stirring fears in certain countries.”

Financial News reports (subscription required) that, “Sovereign wealth funds should not be subjected to any greater stipulations on disclosure than other market participants, despite a predicted growth in their assets to about $20 trillion (€12.63 trillion) by 2020, according to asset manager State Street.”

Thomson Reuters reports that, “Sovereign wealth funds could collectively own over 5 percent of the world’s major companies over time and their desire to diversify into equities would push real bond yields to rise, State Street said Tuesday.”

The South China Morning Post interviews (subscription required) Tse Kam-keung, EVP of State Street Bank and Trust in Hong Kong, who says that, “I cannot name many of our government clients but we would definitely like to work with China Investment Corp and Korea Investment Corp, the two major sovereign wealth funds in Asia. We will also monitor the development of a similar fund to be set up in Japan.”

Reuters reports that, “South Korea’s National Pension Service, which manages more than $200 billion, is looking to buy shares in top U.S. financial services firms in the wake of the subprime meltdown, a source close to the fund said on Tuesday. The world’s fifth-largest pension fund by assets may use a foreign asset manager to target companies and invest in them on its behalf, the source told Reuters, asking not to be identified until an announcement is made.”

It looks like the NPS is being supported by State Street.

George Hoguet, senior portfolio manager and global investment strategist at State Street Global Advisors, writes in the Financial Times that, “As investors fret over the growing possibility of a US recession in 2008 and potential earnings downgrades, they should not forget that the allocations of sovereign wealth funds are likely to support equity valuations in the medium term.”