The Future Generations Fund in Kuwait is witnessing significant diversification and a wide geographic spread, as it is distributed across approximately 230,000 companies in global markets, aiming to achieve the best available returns with the lowest risk levels. The investment vision of the Public Investment Authority is based on specific goals, the most important of which is to achieve substantial returns on long-term investments using the highest professional standards, enabling it to manage the market risks and sudden fluctuations it faces.
Sources stated to Al-Qabas newspaper that the Authority's office in London manages more than a third of the Future Generations Fund's investments, enjoying preferential treatment from the British government concerning taxes, facilitation, and investment incentives. The Future Generations Fund operates according to a meticulous strategy that ensures the optimal management of Kuwait's financial reserves, aiming to provide alternative revenues to oil profits. The fund's investments are spread across more than 125 economies worldwide, both in developed and emerging markets.
The Future Generations Fund comprises investments outside Kuwait based on a recognized asset distribution strategy across various categories, including traditional assets like equities and bonds in public and private companies, real estate, private equity funds, alternative investments, and others. The fund’s investment strategy, approved by the Board of Directors of the Public Investment Authority, outlines the guiding principles in parallel with the fund's related risk and return objectives. Its assets are managed from the Authority's offices in Kuwait and London according to a task distribution adopted by the Board of Directors.
Investment decisions at the Public Investment Authority go through several stages, primarily market studies, followed by determining the targeted returns from investments, assessing risk levels that should not be exceeded, and establishing benchmarks for comparing the investment performance of the funds invested. Additionally, investment managers are provided with those controls and requirements in preparation for initiating targeted investments.
The Public Investment Authority manages more than 30% of its investments through direct management via the Kuwait Investment Office in London, while the remaining 70% is invested indirectly through external investment managers. The Authority recently indicated a distribution of its invested funds across a variety of investment assets with strategic weights updated based on global market data, defining target percentages for these assets according to its performance expectations for each asset.
The target allocation for investment in equities was set at 55%, which contributed to the fund's benchmark performance last year, benefiting from the rise of most stock markets, especially the U.S. market. The Authority allocated a target investment percentage of about 22.5% for bonds, and 10% each for real estate and alternative investments, while the targeted percentage for cash is approximately 2.5%. The Public Investment Authority is currently ranked third among the largest sovereign wealth funds in the world in terms of assets, with a valuation of approximately $700 billion.
