The sovereign wealth fund boom: Why investment and operating models must evolve
Assets held by sovereign wealth funds worldwide are expected to nearly double over the coming decade to $30 trillion by 2035, according to Bain & Company. Funds based in the Middle East, such as the Public Investment Fund in Saudi Arabia and Mubadala Investment Company in the UAE, play a leading role on the global stage.
The Bain & Company report highlights the strong rise of sovereign wealth funds over the past decade. These funds are state-owned investment vehicles that manage national wealth and invest in financial assets and opportunities to achieve long-term financial, economic, and strategic goals.
Sovereign wealth funds are typically funded by oil & gas revenues (very common in Gulf states), foreign exchange reserves, budget surpluses, or privatization proceeds.
Between 2020 and 2025, sovereign wealth funds grew strongly at a 10.3% CAGR – outpacing every other class of institutional investor – to reach total assets under management of $15 trillion in 2025. Beyond size, the study finds that sovereign wealth funds have also expanded significantly in their influence on national agendas, dealmaking environments, and the sophistication with which they pursue their objectives.
Top 10 players
The world of sovereign wealth funds is concentrated. Norway’s Government Pension Fund Global is the largest in the world, with an estimated $1.7 trillion in assets under management, followed by SAFE Investment Company at $1.4 trillion (China), China Investment Corporation at $1.2 trillion (China), and then three Middle East-based funds: Abu Dhabi Investment Authority (UAE), Kuwait Investment Authority (Kuwait), and the Public Investment Fund (Saudi Arabia).
Rounding off the top 10 are GIC (Singapore), Qatar Investment Authority (Qatar), Hong Kong Monetary Authority Exchange Fund (Hong Kong), and Temasek (Singapore).
According to Bain & Company’s estimates, the top 10 funds in the market hold more than 75% of total wealth, concentrated across the Middle East (40%), Asia (40%), and Europe (20%).
The outlook for the sovereign wealth fund market remains strong: by 2035, assets under management are expected to reach $30 trillion, growing at a CAGR of around 9%.
A shifting investment model
Based on interviews with sovereign wealth fund leaders, Bain & Company notes that the way sovereign wealth funds pursue their ambitions – and their operating archetypes – is expected to change significantly over the coming decade.
“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 achieving world-class returns,” summarized Grégory Garnier, partner at the global strategy consulting firm.
The authors outline a future shaped by forces such as higher interest rates, geopolitical fragmentation, technological disruption, volatility in hydrocarbon revenues, and the accelerating energy transition. Internally, there will also be a major shift in how sovereign wealth funds operate, with AI becoming central to investment and decision-making processes.
As sovereign wealth funds continue to grow in scale and influence, Bain & Company concludes that the next phase of growth will depend on strategic clarity across asset allocation, investment approach, and national economic impact.
This will see sovereign wealth funds recalibrate capital deployment, including increasing allocations to alternative assets, expanding direct and co-investment strategies, shifting investment focus toward Asia, and diversifying funding sources through debt issuance and capital recycling.
At the same time, funds will become more deliberate in balancing financial returns with national development objectives, using capital to support economic diversification, build strategic industries, and strengthen long-term national competitiveness.
“Scale gives sovereign wealth funds an advantage, but it is no longer enough on its own,” said Riccardo Molinari, partner at Bain & Company. “As funds grow larger, the differentiator will be strategic clarity: where they deploy capital, how they create value beyond capital, and how effectively they align investment priorities with national economic objectives.”
A supportive operating model
Internally, funds will need to evolve their governance, talent, technology, and organizational structures to support larger portfolios, direct investment strategies, and increasingly global operations. While driving efficiencies and effectiveness, they will increasingly turn to AI to boost decision-making and performance.
The report suggests that sovereign wealth funds should embed AI into investment processes, portfolio management, and operational functions to improve performance and decision-making.
Lise Abi Jaoude, associate partner at Bain & Company, commented: “As sovereign wealth funds expand in complexity, the operating model becomes a critical source of advantage. Stronger governance, sharper talent models, better data and technology, and faster decision-making will be essential as funds manage larger portfolios, pursue more direct investments, and operate across more global markets.”
