Investments from sovereign wealth funds (SWFs) can be attractive to hedge fund managers because such investments typically represent significant and sticky assets. Understanding the character, investment processes, objectives and allocation preferences of SWFs can increase a manager’s likelihood of receiving an allocation from this investor type, thereby growing assets, fees and clout. For insight on refining a marketing approach vis-à-vis another important hedge fund investor type, see “Rothstein Kass Study Explains the ‘Consultative’ Approach to Marketing to Single-Family Offices and the Importance of That Approach for Smaller Hedge Fund Managers
,” Hedge Fund Law Report, Vol. 4, No. 20 (Jun. 17, 2011). With these dynamics in mind, a recent report discusses trends in SWF growth and asset allocation preferences. In particular, the report provides insight into SWF allocations to hedge funds and other alternative investment vehicles and the investment preferences of SWFs by economic sector. This article summarizes the key findings of the report. For a direct discussion of how hedge fund managers can hone their marketing efforts to attract SWF investments, see “Specific Steps that Hedge Fund Managers Can Take to Increase the Likelihood of an Investment from a Sovereign Wealth Fund
,” Hedge Fund Law Report, Vol. 2, No. 42 (Oct. 21, 2009).