The Rise of Collaborative Investing: Sovereign Wealth Funds’ New Strategies in Private Markets

Bernardo Bortolotti Markus Massi Alessandro Scortecci Giacomo Loss Nikola Trajkov

In search of higher returns, sovereign investors have shifted away from traditionally liquid asset allocations centered on fixed income and public equities and toward more illiquid alternative investments—private equity, venture capital, real estate, and infrastructure. In so doing, several SWFs have quickly realized that developing successful alternative strategies can be a daunting challenge, with the potential to disrupt conventional business models, which are geared toward investing through third parties. In our analysis of SWFs’ approaches to investing in private markets, we have developed a taxonomy of models, presented here in order of decreasing delegation level: the LP model, the co-investment model, the investment platform, and the direct investment model. Find out how these models work and how they play a role in the outlook for SWFs.

Principal Investors and Private Equity