Sovereign wealth fund assets are on track to nearly double to $30 trillion by 2035 as state investors adapt to higher interest rates, geopolitical fragmentation, technological disruption and the energy transition, according to a report released by consulting firm Bain & Company on Monday.
The report, based on Bain’s first survey of sovereign wealth fund leaders and research covering institutions representing about half of addressable sovereign wealth fund assets under management, said sovereign wealth funds reached about $15 trillion in assets under management in 2025.
Bain said sovereign wealth funds expanded faster than any other class of institutional investor over the past decade, achieving a compound annual growth rate of 10.3% between 2020 and 2025.
Growing role for Middle East investors
Bain said the Middle East continues to play a pivotal role in the sovereign wealth fund landscape.
According to the report, the world’s 10 largest sovereign wealth funds control more than 75% of total sovereign wealth fund assets, with holdings concentrated across the Middle East, Asia and Europe. The Middle East accounts for about 40% of assets held by the top 10 funds.
“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 Grégory Garnier, partner and head of Bain’s private equity and sovereign wealth fund practice in the Middle East.
Four priorities for the next decade
The report identified four strategic priorities that sovereign wealth funds are focusing on over the coming decade.
These include recalibrating capital deployment through greater allocations to alternative assets, expanded direct and co-investment strategies, increased investment activity in Asia, and diversification of funding sources through debt issuance and capital recycling.
Funds are also seeking to balance financial returns with national development objectives by supporting economic diversification, building strategic industries and strengthening long-term competitiveness.
In addition, sovereign investors are increasing investments in artificial intelligence and redesigning operating models, including governance, talent, technology and organisational structures, to manage larger and more global portfolios.
Alternatives and AI gain importance
Alternative assets now account for around 30% of assets under management across major sovereign wealth funds, up from about 20% in 2015, according to the report.
Direct investments and co-investments represent an estimated 50% to 60% of private market deployments as funds seek greater control over investments and value creation.
Bain said sovereign wealth funds have committed more than $350 billion globally to AI-related investments spanning semiconductors, data centres, infrastructure and applications.
The report also found that sovereign investors are increasingly embedding AI into investment analysis, portfolio management, risk management and operational functions.
“As sovereign wealth funds expand in complexity, the operating model becomes a critical source of advantage,” said Lise Abi Jaoude, associate partner at Bain and co-author of the report.
Riccardo Molinari, partner at Bain and co-author of the report, said strategic clarity would become increasingly important as funds grow larger and seek to align investment priorities with national economic objectives.
Bain said the next phase of sovereign wealth fund growth would depend on decisions around asset allocation, investment approaches, value creation, economic impact and operating model design.
