Sovereign wealth funds plan increased allocations to large macro hedge funds

Hedge funds will find attracting investments from sovereign wealth funds tricky. But to diminish risk and diversify portfolios, SWFs are increasingly interested in allocating to managers.

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Sovereign wealth funds (SWFs) have been quietly accumulating, investing and spending excess reserves since the first SWF, the Kuwait Investment Authority, was established in 1953.

The term has only gained common usage since Andrew Rozanov, now head of sovereign advisory at fund of hedge funds (FoHFs) Permal, coined the term during an interview in 2005.

The neologism was not initially welcomed, partly because SWFs are by no means a homo­genous group. Some are stabilisation funds solely set up to

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