The first six months of 2022 have been brutal for stock investors. They’re suffering through a bear market after seeing the market more than double from the end of March 2020 to New Year’s Eve 2021. As a result, bottom-fishing value seekers are looking for bargains – including so-called activist hedge funds, which take big positions in target companies, then try to take them over by urging shareholders to elect new members to the board of directors.

In recent months, one of the largest activist investors – Starboard Value – has announced plans to go after no less than 15 publicly traded companies. At some of these companies, shareholders might welcome the attention. But in one group, they are shaking in their boots: software company shareholders want no part of the activist approach.

That’s because when they invest in software companies, activist hedge funds are such strikeout artists they make this year’s bear market look like a home run by comparison

Take the aforementioned Starboard, for example. In recent years, this hedge fund has seized board seats on four software companies: ComScore, Symantec, Commvault and eHealth. Average return for the four stocks? A 38% loss. Imagine how you’d feel as an ComScore shareholder since Starboard came to the rescue in July 2017: the stock is down more than 90% since then. (That’s not a typo.)

It’s not hard to understand why. As this article points out, activist hedge funds tend to hold their shares for only about 14 months, while cutting research and development spending by more than half. Without investing in innovation, software companies get leapfrogged by the competition. Customers flee, and revenue plummets.

Creating turmoil, slashing R&D and laying off workers is especially harmful in the current climate, when unemployment is historically low and qualified workers are scarce. Software companies, which rely on top talent to produce constant innovation, can’t risk losing their best engineers and programmers – not to mention salespeople and marketers – because outsiders with no software expertise take over the company.

Indeed, this 2020 Bain Inc. study of successful software companies found that the #1 most important element that set the best software companies apart was – you guessed it – their ability to retain employees.

Word to the wise: if you’re a software company shareholder looking for a share-price rebound, don’t trust predatory activist hedge funds to deliver results. History’s lesson is clear: they don’t know how.

In these ‘stagflation’ times, it’s difficult to know where you can really make a return on your cash. This is a time when most people want to play it safe, and hold onto what they have. Yet others, this is a time of speculation.

In recent times, there has been a lot of noise about speculative cryptocurrencies. However, an asset which has been a lot steadier – and a lot more profitable for many – is nothing technological or newfangled. In fact, it’s an item that’s almost as old as time itself – watches.

Of course, not all watches make a good investment. But research from Luxe Watches shows that many luxury watches have performed as exceptionally good investments over the past five years.

In fact, the numbers show that many luxury watches have not only increased in value over the past 5 years – they have actually outperformed other asset classes, including the S&P 500.

Better than the stock market?

The S&P 500, an index which tracks the USA’s 500 biggest publicly traded companies, is seen by many as the safest and best place to invest your money for strong, reliable returns. However, the data suggests that investing in the luxury watch market has significantly higher returns over the past five years. On average, Rolex watch prices have increased around 90% over five years – similar to the S&P 500. However, Patek Philippe watches have dwarfed the S&P 500s gains, with over 200% returns.

A better investment than real estate?

The property market has almost always been considered as a safe bet. That might be true now, and it has certainly been true in the past. However, the data is clear that for those astronomical returns, luxury watches outperform real estate. The UK House Price Index demonstrated just over a 20% return over the past five years. However, many Rolex watches increased in value around 90%.

Which watch brand is best?

Rolex is the best-known luxury watch brand out there. However, it is not the highest-performing watch brand in terms of its investment value. That title goes to Patek Philippe.

The Rolex brand is recognised around the world, and the data shows that Rolex investments, with an average ROI of 93%, outperformed most other asset classes – including real estate and the S&P 500. That’s certainly not bad going!

However, Patek Philippe is the winning brand in terms of its investment value. With an ROI of 207% over the past five years, it leaves even Rolex in the dust. The second place honours go to Audemars Piguet, which yielded 158% on average.

Not all luxury watch brands can claim to share this outstanding price performance. Vacheron Constantin watches produced an ROI of 55%, and A.Lange & Söhne an ROI of 18% over the past five years. That’s certainly not bad, although it pales in comparison to the staggering returns from Patek Philippe.

As inflation continues to rise, it’s hard to know how the prices of any asset class will look in the next five years. But if the last five years are anything to go by, luxury watches remain in high demand, with rising prices that reflect that demand.

Investment funds are a pool of money from several investors or participants used to buy financial instruments all at once. The investor retains all ownership rights regarding his investment in the shares. Among the many types of investment funds are exchange-traded funds, hedge funds, money market funds, and mutual funds. Similarly, sovereign wealth funds (SWFs) are government-owned investment funds made out of government income. They frequently come from a nation’s excess reserves. Both residents and a country’s economy can benefit from SWFs. State transfer payments, trade surpluses, foreign exchange operations, privatization proceeds, and bank reserves are some of the resources that can be used to fund a sovereign wealth fund.

Most investors and businesses rely on intermediary firms, typically known as asset management companies, to make investments and oversee portfolios. These companies manage investments and decide which investments to undertake. A similar investment company in the MENA region is Dubai Investment Fund (DIF), having more than 20 years of investing experience. However, some companies are designed for extremely rich investors who often give managers complete control over their investment portfolios so that they may focus on managing their holdings. In this post, you will learn about some of the world’s top investment management companies. You will also get a quick review of funds, what SWFs are, and the world’s largest sovereign wealth funds.

A Detailed Look At Investment Funds

Investment funds allow for the management of assets without involving individual investors in investment decision-making. An investor evaluates several factors, including risk assessment, investment objectives, and cost to choose funds. After choosing the fund, the management of the entire investment process is the responsibility of a fund manager. Investor decisions, such as which securities to hold and how many to hold, and when to buy and sell, are made by the fund manager. An investment fund can either be a versatile investment like an index fund or a highly specialized one like the exchange-traded fund. An index fund monitors the S&P 500 index, while an ETF invests primarily in small-cap technology firms.

●     The Concept Of Funds: Describing How They Are Used

Funds are referred to the amount of money that has been set aside to accomplish a particular objective. There can be multiple reasons for setting up a fund. Creating a fund for a city’s civic center, a college’s scholarship fund, or an insurance company’s claims fund are a few reasons why funds are established. Governments, individuals, and corporations use funds to meet emergency needs. Emergency funds or trust funds can be designated for a specific event or a person. On the other hand, funds also serve the objective of making money because individual investors and companies can invest money in different funds to generate profits. Mutual funds, hedge funds, and government bond funds are a few examples of funds. A mutual investment fund gathers funds from many investors and invests them in a variety of assets. Investments by hedge funds aim to earn above-market returns on the assets of individuals and institutions that hold high-net-worth. Similarly, specific government expenses are paid by special revenue funds, such as those derived from taxation.

●     The Working Structure Of The Largest Asset Management Companies

Asset management companies prefer to work with big establishments, institutions, and organizations, such as giant nonprofit institutions, large corporations, or alliances. However, several well-known companies cater to the needs of individual investors. Many asset management companies charge fees depending on the asset value they manage, while some demand fixed rates. These companies also provide brokerage services and may collaborate with their rivals to trade mutual funds. Investors may purchase and sell mutual funds from a rival business through the online marketplace of another asset management firm. DIF is an independent investment management firm that offers investment solutions such as funds, tailored investment guidelines, and ETFs based on the needs of its clients. Fixed income, stocks, and multi-asset strategies are some of its investing approaches.

●     Six Top Companies That Manage Investments

In a sector that consistently experiences annual growth, the following top six investment firms in the world are increasing at a remarkable rate. What is the market value of the investment management sector? In 2022, investment securities are projected to grow from approximately $64 trillion to $102 trillion. It shows an increase of nearly 6% CAGR. BlackRock, The Vanguard Group, UBS Group, Fidelity, State Street Global Advisors, and Dubai Investment Fund (DIF) are the top six investment firms. An investment company gathers investors’ funds and invests them in the right securities to increase the value of the original investments. The most reputable asset management firms have been listed below. Based on their most recently reported balance sheets from February 2022, these rankings are determined according to how many funds are under their control.

1.    BlackRock: The Company Manages $9.464 Trillion In Assets

With $9.464 trillion in assets under management, BlackRock is the world’s largest asset manager. A worldwide investment management company based in the US, BlackRock was established in 1988. It presently serves clients from 70 offices spread over 30 countries. BlackRock, which is regarded as the biggest shadow bank in the world, has 14,900 employees. The business is renowned for having pioneered the development of ETFs. In addition to investing in equities, fixed income, and money market securities, BlackRock offers a variety of funds and portfolios.

2.    The Vanguard Group: The Company Manages $8.4 Trillion In Assets

Vanguard is a well-known American licensed asset manager noted for its passive investing method. With USD 8.4 trillion in assets under administration, the business has its headquarters in Malvern, Pennsylvania. In terms of ETFs, Vanguard is the second-largest corporation in the world behind BlackRock. In addition to financial planning, trust services, and brokerage services, it offers educational account services, variable and fixed annuities, and a wide range of brokerage services.

3.     UBS Group: The Company Manages $4.432 Trillion In Assets

Having USD 4.432 trillion in AUM, the USB group comes in third place among the six top companies. Swiss-born UBS Group is a global investment company and provider of different financial products. UBS is developing its financial offerings by embracing blockchain solutions. It is improving its cybersecurity and customer activity encryption through a research facility based in London. Its confidential organizational culture and maintaining the privacy of clients have made it a profitable asset management organization. In addition, the group provides both asset and wealth management services to its users.

4.    Fidelity: The Company Manages $4.23 Trillion In Assets

Fidelity ranks fifth among all asset managers globally with USD 4.23 trillion in AUM in 2022. With more than 50,000 workers globally and over 30 million clients, Fidelity is an American-based financial services provider with headquarters in Boston. The core financial product of Fidelity is managing a vast family of mutual funds as a brokerage company. Besides investment advice and fund distribution, it also offers wealth management, cryptocurrency, life insurance, and other services. Investors can use Fidelity’s website to trade securities. The company is a discount broker and asset management company.

5.    State Street Global Advisors: The Company Manages $3.68 Trillion In Assets

The fifth largest investment firm is State Street Global Advisors. In addition to offering investment services in the United States, Europe, Asia, and Australia, State Street Global Advisors has 25 locations around the world. It handles assets for a broad spectrum of corporate investors, spanning non-profits, regional governments, organizations, and even academic institutions. Further, the firm offers a wide range of financial products including asset management, mutual fund, exchange-traded fund, and sub-advisory services.

6.    Dubai Investment Fund (DIF): The Company Manages $320+ Billion In Assets

Dubai Investment Fund (DIF) is the sixth largest privately owned investment firm headquartered in Dubai. In almost all areas of the international securities markets, Dubai Investment Fund is well-established and has a proven track record. DIF has developed into one of the largest global investment funds. It was founded in 2001 and serves a diverse spectrum of private and institutional customers worldwide, including pension funds, sovereign wealth funds, fund sponsors, insurance companies, and many others.

Getting To Know Sovereign Wealth Funds: An Overview 

Since more nations establish funds and invest in well-known businesses, SWFs have gained much traction among countries and their governments. Countries can invest surplus funds in stocks or other asset securities through sovereign wealth funds, which ultimately address the concerns of a growing economy of any country. Sovereign wealth funds are used by countries as a means of accumulating wealth that can be used to boost their economies and benefit their population. In general, sovereign wealth funds serve two main purposes: diversifying the economy and producing wealth for the next generation. Governments manage and control sovereign wealth funds, which are invested in several assets and securities. Instead of holding extra funds or reinvesting them, a country with surplus funds invests them through a sovereign wealth fund.

●     What Kind Of Investments Do SWFs Make?

Typically, SWFs have been long-term, passive investors. Government bonds, stocks, and foreign direct investment are just a few of the asset classes in which SWFs invest. Hedge funds and private equity that are inaccessible to the majority of regular investors are becoming a more popular choice for funds for investments. Different investing techniques are employed when investing in sovereign wealth funds. Several firms only make investments in financial assets that are traded publicly while others make investments across all significant investment vehicles.

●     Five Arab Region’s Biggest Sovereign Wealth Funds

SWFs are becoming more influential in the international economy. Sovereign wealth funds are state-owned institutions that get financing from several sources with ties to the state. They use those funds to make investments in securities like stocks, bonds, and real estate that have the potential to increase in value. The top five largest wealth funds in the Arab region, as measured by total fund size, are listed below.

1.    Abu Dhabi Investment Authority With Asset Under Management $696.66 Billion

The ADIA was founded in 1976 and has been declared the largest SWF in the Middle East. The money earned from Abu Dhabi’s oil exports serves as ADIA’s main financing source. Over 24 distinct investment vehicles and subcategories make up the SWF’s global range of investments. AIDA has not provided any further information regarding its particular investments and fund size.

2.    Kuwait Investment Authority With Asset Under Management $592 Billion

KIA was founded in 1953, making it the oldest SWF in the entire world. This fund was established to invest surplus oil export earnings and lessen the country’s dependence on oil resources. In its fiscal year ending March 2020, Kuwait decided to deplete seven billion dinars to cover its deficit. Despite this move, the KIA is likely to keep its position as the Arab world’s second-largest SWF.

3.    SAMA Foreign Holdings With Asset Under Management $505.76 Billion

SAMA was founded in 1952 to handle Saudi Arabia’s significant oil surpluses and meet the nation’s spending requirements. Unlike the Public Investment Funds, SAMA Foreign Holdings has a different investing approach. It primarily places a lot of emphasis on safe fixed-income assets such as government debt instruments, especially US Treasury bonds. Low-yielding US bonds are likely to make up the majority of their holdings.

4.    Public Investment Fund With Asset Under Management $320 Billion

The PIF, which was founded in 1971, has seen a major transformation after the launch of Saudi Arabia’s Vision 2030. According to Vision 2030, the fund will have assets worth over $2 trillion, making it the biggest sovereign wealth fund in the world. Public Investment Fund has massive investments in many high-profile organizations and projects, including Virgin Galactic, the Softbank Vision Fund, and many others.

5.    Qatar Investment Authority With Asset Under Management $320 Billion

QIA was established in 2005 to manage and invest the funds or assets of Qatar states. The purpose of this SWF is to develop the country’s economy and produce long-term benefits for the nation. It makes investments in publicly listed assets and invests directly in initiatives including real estate, infrastructure, financial institutions, business, and investment funds.