Evolution of investment policies in sovereign wealth funds toward alternative investments

In the aftermath of the recent financial market conditions characterized by low interest rates, and by the drop of the oil price, there is a growing number of Sovereign Wealth Funds which are working to pursue more active SAA by including in their investment portfolios alternative assets. At the same time, misaligned incentives, high management fees and poor returns embedded in third party management agreements are favouring the developments of new collaborative investment solutions between GPs and LPs. SWFs are trying to dis-intermediate and to align with asset management company’s interests by developing in-house teams of investment professionals thorough what we called direct investments solutions. Among those the most interesting ones seems to be co-investments and partnerships. This dissertation aims at giving an answer to how these funds can concretely co- operate with different institutional investors, which are the key challenges and how, through the definition of some qualitative touchstones, they can be overcome. Conscious of the fact that this is quite a hard attempt, since different return objectives, different investments philosophies and different geographies strongly complicate the clarification and overarching trial of providing a synthetic qualitative framework, with this dissertation we will contribute to the structuring of practical concerns about SWFs direct investing toward alternatives.