Energy Security Tops Investment Agenda for Middle East Sovereign Wealth Funds
Nearly nine in ten Middle East sovereign wealth funds surveyed identify energy security as a top investment priority, according to the 14th annual Invesco Global Sovereign Asset Management Study. The figure stands at 89 percent, surpassing the global average of 80 percent. This focus reflects a pragmatic response to geopolitical tensions, supply chain disruptions, and market volatility.
Infrastructure and Private Markets Gain Prominence
The report also highlights that 67 percent of Middle East investors see critical infrastructure as a key priority, underscoring efforts to secure both physical and digital foundations for economic stability. Private markets are another core focus: all Middle East sovereign wealth funds surveyed identified them as a key driver of long-term returns, significantly above the 65 percent global average. Infrastructure is expected to attract the largest share of additional capital, with 70 percent of respondents planning to increase allocations over the next 12 months. Josette Rizk, head of Middle East and Africa at Invesco, said: “Sovereign investors in the Middle East are taking a highly pragmatic approach to a more uncertain world.” She added that “resilience is not yet as deeply embedded as in some global peers, but it is rapidly becoming a core consideration in how portfolios are built and managed.”
Resilience and Risk Management on the Rise
Every Middle East sovereign wealth fund surveyed expects the next decade to be more challenging than the previous two, compared with 69 percent of sovereign wealth funds globally. Although only 31 percent of regional sovereign wealth funds currently rank resilience as a core investment priority (versus 48 percent globally), nearly half said resilience is becoming as important as returns in portfolio construction. Among central banks, 56 percent shared that view. Risk management frameworks are strengthening: 80 percent of sovereign wealth funds and 88 percent of central banks rely on risk concentration monitoring, both above global averages.
ETF Adoption and AI Integration
Exchange-traded funds are gaining traction, with 33 percent of regional sovereign wealth funds using them (slightly below the global 43 percent), while 43 percent of regional central banks use ETFs, above the 31 percent global average. Sovereign wealth funds deploy ETFs mainly for tactical asset allocation and liquidity management; central banks use them for strategic long-term exposure. Interest in active and ESG-focused ETFs is increasing. Artificial intelligence is a core focus: all Middle East sovereign wealth funds view AI as a transformative technology with a multi-decade impact, compared with 77 percent globally. AI infrastructure and semiconductors are seen as especially compelling, with 100 percent of sovereign wealth funds identifying them as attractive long-term themes. Middle East sovereign wealth funds overwhelmingly view the US as best positioned to lead AI development, with none identifying China. Adoption is already widespread: 88 percent of Middle East sovereign investors use AI in their investment processes, exceeding the 69 percent global average. Sovereign wealth funds lead with 100 percent adoption compared with 75 percent among central banks.
The Invesco study involved interviews conducted by NMG Consulting between January and March, with sampled institutions managing a combined $29 trillion in assets.
