Invesco finds US$29 trillion rotating toward infrastructure and private credit
A net 17 percent of sovereign wealth funds plan to reduce their listed equity exposure this year, a sharp reversal from previous years, according to Invesco's fourteenth Global Sovereign Asset Management Study.
The Financial Times reported that, in contrast, a net 28 to 35 percent intend to add to private equity, private credit and infrastructure.
The driver is concentration.
Josette Rizk, head of the Middle East and Africa region at Invesco, told the FT there had been "a significant turn against equities" this year, noting that "index-heavy passive strategies now carry significant exposure to a small number of large-cap technology companies."
The FT reported that the weight of the 10 largest stocks in the S&P 500 has doubled to 38 percent over the past decade as the Magnificent 7 outpaced the wider market.
A North American liability sovereign told Invesco it had "drawn down from equities because of a high concern of deep concentration."
Capital is moving toward assets with longer-duration, inflation-linked characteristics. Infrastructure rose to 9.0 percent of sovereign wealth fund assets in 2026, nearly double its 2022 level, as per Invesco, making it the fastest-growing alternative asset class over the period.
Benjamin Jones, Invesco's global head of research, told the FT that "capital is rotating towards infrastructure and private credit" and that "the bar for passive market exposure is rising."
A Middle Eastern fund told Invesco "the AI wave is currently best captured in private credit and infrastructure opportunities," and demand for infrastructure also reflects national security considerations such as building data centres domestically.
A breakdown in the bond-equity relationship is reshaping how portfolios are built.
Jones told the FT that "putting equities and bonds together is not going to give you a resilient portfolio in the same way it did in the past," as the longstanding inverse correlation has eroded since the 2021 to 2022 inflation shock, raising the risk that both sell off together.
An APAC liability sovereign told Invesco that "bonds still help, but they do not solve everything on their own."
That is pushing resilience to the centre of portfolio design.
Most respondents to the Invesco study already treat it as an important consideration and expect its role to grow over the next five years.
"Resilience is becoming a hard requirement, not a nice-to-have," Jones told Reuters.
One APAC investment sovereign told Invesco a resilient portfolio can "take a hit and still hold together," while a European liability sovereign described the philosophy as "prepare, not predict."
Energy ranked highest among themes seen as offering credible resilience benefits, cited by 80 percent of respondents, according to Invesco, with the energy-hungry build-out of AI adding to the appeal as reported by Reuters.
A North American liability sovereign told the study that "energy security offers the greatest resilience benefits, closely followed by critical infrastructure."
The gap between stated and actual horizons is where much of this plays out.
Around 40 percent of sovereign wealth funds operate on an effective investment horizon shorter than their stated one, Invesco found, with political cycles, board expectations and drawdown sensitivity shortening timelines in practice.
Clear long-term objectives and benchmarks ranked as the most effective governance feature for preserving discipline, cited by 76 percent.
A North American liability sovereign told Invesco that political and stakeholder pressures "do not change long-term goals, but they can impact timelines."
On AI, market concentration ranked as the top portfolio risk, cited by 52 percent of sovereign wealth funds, ahead of valuation and bubble risk.
An APAC liability sovereign told the study it was keeping broad US exposure "but are being more deliberate about how we do this," with "a greater focus on active and factor-based approaches to avoid overconcentration."
Just 2 percent of respondents viewed AI as unlikely to matter for growth, while 77 percent called it transformative.
Central banks, meanwhile, are confronting dollar concerns and reviewing where reserves are held.
Reuters reported that 61 percent of central banks polled said US debt levels negatively affect the dollar's position as a reserve asset, up from 20 percent in 2024, and 29 percent expect its reserve-currency status to weaken within five years, up from 12 percent in 2022.
Several institutions reported reviewing reliance on US-based custodians and counterparties amid geopolitical tensions, with one European central bank saying it had already replaced its US custodian.
One-third of respondents intend to increase gold holdings, Reuters reported, with an APAC central bank telling Invesco that "gold protects against far left-tail events."
