RIYADH: Middle Eastern sovereign wealth funds are entering a pivotal period in which their ability to adapt their strategies will be key to sustaining growth over the next decade, according to a new analysis.
In its latest report, Bain & Co. revealed that the Middle East currently accounts for approximately 40 percent of assets held by the top 10 SWFs, which together control more than 75 percent of the global SWFs amount.
While strong portfolio performance and government capital injections have driven this expansion, the next decade will require sovereign wealth funds to adapt to challenges including higher interest rates, geopolitical fragmentation, and technological disruption, as well as volatile hydrocarbon revenues and the global energy transition.
For SWFs in the Middle East, this growth aligns with broader national strategies to reduce oil dependence and build sustainable, knowledge-based economies.
“The next generation of leading sovereign wealth funds will be defined by their ability to deploy capital strategically, create value operationally, and deliver their dual mandate in a targeted and sustainable way while delivering world-class returns,” said Gregory Garnier, partner, Bain & Co. and head of the Private Equity and Sovereign Wealth Fund practice in the Middle East.
Bain & Co. revealed that SWFs, globally, have grown faster than any other institutional investor class over the past decade, reaching about $15 trillion in assets under management in 2025 with a 10.3 percent compound annual growth rate between 2020 and 2025. They are set to nearly double in size to $30 trillion by 2035.
SWFs are recalibrating capital deployment by increasing allocations to alternative assets, which now make up around 30 percent of assets under management across major funds compared to 20 percent in 2015.
They are also expanding their direct and co-investment strategies, which now account for an estimated 50 to 60 percent of private market deployments, while increasing their focus on Asia and diversifying funding sources through debt issuance and capital recycling.
Many sovereign investors are balancing financial returns with national development objectives. This approach involves using capital to support economic diversification, build strategic industries, and enhance long-term national competitiveness.
An example of this is Saudi Arabia’s Public Investment Fund leading a consortium to acquire Electronic Arts for $55 billion in a take-private deal expected to close in the first quarter of 2027.
Artificial intelligence has also emerged as both a major investment theme and an operational priority. SWFs have committed more than $350 billion globally to AI-related investments across the value chain, from semiconductors and data centers to applications and infrastructure.
