Sovereign investors shield their portfolios against a more uncertain world and prioritize innovation and diversification
29 JUN, 2026
By Joanna Piwko from RankiaPro Europe
The fourteenth edition of Invesco's annual study on sovereign asset management (IGSAMS) paints a picture of profound transformation in the way the world's largest institutional investors build and manage their portfolios. In a context marked by geopolitical fragmentation, persistent inflation, and the concentration of equity markets, the sovereign funds and central banks that participated in the report —144 institutions that collectively manage about 29 trillion dollars— are rewriting the principles that have guided their decision-making for decades.
The central message of the study is clear: resilience has ceased to be a byproduct of diversification to become an explicit objective. 71% of central banks and 54% of surveyed sovereign funds affirm that resilience considerations weigh as much as the pursuit of profitability when designing their portfolios. To reinforce this resilience, 82% of central banks actively track risk concentration and 76% apply scenario analysis; among sovereign funds, these figures are 65% and 62%, respectively.
"The big change we see among sovereign investors is that resilience is becoming an indispensable requirement", says Benjamin Jones, global head of analysis at Invesco. "These investors are not trying to anticipate the next shock. They seek to make their long-term investment more enduring by building portfolios that can withstand a greater number of scenarios, in a world where confidence and stability cannot be taken for granted".
Infrastructure: the alternative asset of the decade
One of the most striking findings of the report is the extraordinary growth of infrastructure as an asset class within sovereign portfolios. Its weight has gone from 4.9% of the total assets of sovereign funds in 2022 to 9% in 2026, consolidating itself as the fastest growing alternative asset in the last five years. Behind this advance are decarbonization, renewable energies, digital infrastructure, and data centers, all perceived as levers of productivity and long-term economic development.
In parallel, 65% of sovereign funds identify private markets as a key driver of profitability, with private credit also emerging as one of the main destinations for new capital. This shift towards illiquid assets is not without tension: 39% of sovereign funds acknowledge that their actual investment horizon does not reach the one they publicly declare, which compromises their ability to capture the illiquidity premiums that theoretically justify these bets. The expectations of the boards of directors and sensitivity to volatility are each cited by 37% as the main practical constraints.
ETF: from tactical tool to strategic component
The report also documents a growing adoption of exchange-traded funds (ETFs) among large institutional investors. 39% of respondents already use them, with notable differences depending on the type of institution: 58% of investment sovereign funds and 53% of passive sovereigns use them, compared to 31% of central banks and just 24% of development funds.
The motivations, however, diverge significantly. Central banks mainly use them to gain strategic exposure—cited by 67%—valuing above all operational ease, while sovereign funds use them for tactical asset allocation (64%) and liquidity management (52%), prioritizing transparency. Commodity ETFs also serve a specific function for central banks: accessing gold without the logistical requirements of physical metal.
Active ETFs remain in an early stage: only 7% of sovereign funds currently use them, although an additional 26% are considering incorporating them. "ETFs are evolving from implementation tools to more integrated components of portfolio construction", points out Josette Risk, head of Middle East and Africa at Invesco.
AI: high conviction, complex exposure
Artificial intelligence is at the center of another of the major tensions reflected in the study. 77% of sovereign investors consider it a transformative technology with growth implications for several decades, and only 2% question its economic impact. However, translating that conviction into concrete portfolio positions is complicated: the 52% of sovereign funds point to market concentration as the main risk of investments linked to AI, since exposure usually depends on a small group of large tech companies.
The preferred investment routes are enabling infrastructure and productivity improvement, each cited by 69% as the most attractive long-term themes. Energy supply emerges as the determining constraint of the next phase of AI expansion, making its deployment as much an energy issue as a technological one.
Parallelly, the internal use of AI in investment processes has skyrocketed: 69% of sovereign investors already apply it, compared to 33% who did so in 2024, mainly for research and information synthesis.
The dollar loses followers among central banks
The report concludes with a significant signal for currency and public debt markets. The 61% of central banks believe that US debt levels are eroding the dollar's position as a long-term reserve asset, a percentage that triples the one recorded in 2024, when only 20% shared that opinion. Diversification away from the dollar is advancing, albeit gradually in the absence of a credible global alternative.
The gold is the main beneficiary of this rebalancing. More than a third of central banks plan to increase their allocations in the next three years, and protection against inflation has emerged as a determining factor for 72% of respondents, compared to 35% who mentioned it in 2025. Geopolitical hedging and inflation hedging thus converge in the same asset, consolidating the golden metal as an immovable pillar of sovereign reserves in times of uncertainty.
