Markets
Visualizing the Green Investments of Sovereign Wealth Funds
See this visualization first on the Voronoi app.
Visualizing the Green Investments of Sovereign Wealth Funds
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With $11.2 trillion in assets, sovereign wealth funds are increasingly looking to sustainable investments as the energy transition gains greater traction.
Sovereign wealth funds are government-run pools of capital typically derived from surplus reserves or revenues from commodity exports. While investment in green assets have risen significantly in recent years, they still make up a small share of overall fund assets, covering less than 1% of the total.
This graphic compares the investment in green and black assets across sovereign wealth funds, based on data from Global SWF.
Green Assets Outpace Black Assets
In 2023, sovereign wealth funds held $26 billion in green investments—surpassing black investments by more than double.
While green assets include investments in renewable energy and electric vehicles, black assets are seen across fossil fuels and finite resources. Below, we show the growth in green investments in these funds since 2018:
| Year | Black Assets Value of Investments | Black Assets # of Investments | Green Assets Value of Investments | Green Assets # of Investments |
|---|---|---|---|---|
| 2023 | $12B | 15 | $26B | 91 |
| 2022 | $7B | 11 | $19B | 51 |
| 2021 | $7B | 8 | $24B | 47 |
| 2020 | $15B | 17 | $8B | 21 |
| 2019 | $14B | 19 | $6B | 20 |
| 2018 | $16B | 16 | $6B | 20 |
Nearly half of green assets were held by Gulf funds who are channeling energy revenues into sustainable investments.
For instance, a major UAE fund has stakes in India-based Tata Power Renewables, an offshore wind company based in Germany, and a U.S residential solar firm. Meanwhile, Saudi Arabia’s fund has a 44% stake in the utility firm ACWA Power which is working to increase its hydrogen capacity.
Along with this, Singapore’s fund is making key investments in sustainable assets. In 2022, it created a $5 billion investment arm focused on decarbonizing the global economy.
The government of New Zealand, which runs another leading fund investing in renewables, partnered with BlackRock in 2023 to launch a $1.2 billion fund focused on climate infrastructure. The fund is intended to accelerate the country’s decarbonization efforts as it aims to become among the first countries to have renewables powering 100% of its electricity system.
Markets
The European Stock Market: Attractive Valuations Offer Opportunities
On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?
European Stock Market: Attractive Valuations Offer Opportunities
Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.
The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.
Attractive Valuations
Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.
| Index | Price-to-Earnings Ratio | Price-to-Book Ratio |
|---|---|---|
| EURO STOXX 50 | 14.9 | 2.2 |
| STOXX Europe 600 | 14.4 | 2 |
| U.S. | 25.9 | 4.7 |
| Canada | 16.1 | 1.8 |
| Japan | 15.4 | 1.6 |
| Asia Pacific ex. China | 17.1 | 1.8 |
Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.
On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.
Research also shows that lower price ratios have historically led to higher long-term returns.
Market Movements Not Closely Connected
Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.
The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.
| EURO STOXX 50 | STOXX EUROPE 600 | U.S. | Canada | Japan | Asia Pacific ex. China |
|
|---|---|---|---|---|---|---|
| EURO STOXX 50 | 1.00 | 0.97 | 0.55 | 0.67 | 0.24 | 0.43 |
| STOXX EUROPE 600 | 1.00 | 0.56 | 0.71 | 0.28 | 0.48 | |
| U.S. | 1.00 | 0.73 | 0.12 | 0.25 | ||
| Canada | 1.00 | 0.22 | 0.40 | |||
| Japan | 1.00 | 0.88 | ||||
| Asia Pacific ex. China | 1.00 |
Data is based on daily USD returns.
European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.
Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.
Tracking the Market
For investors interested in European equities, STOXX offers a variety of flagship indices:
| Index | Description | Market Cap |
|---|---|---|
| STOXX Europe 600 | Pan-regional, broad market | €10.5T |
| STOXX Developed Europe | Pan-regional, broad-market | €9.9T |
| STOXX Europe 600 ESG-X | Pan-regional, broad market, sustainability focus | €9.7T |
| STOXX Europe 50 | Pan-regional, blue-chip | €5.1T |
| EURO STOXX 50 | Eurozone, blue-chip | €3.5T |
Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.
The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.
“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX
Partnering with STOXX to Track the European Stock Market
Are you interested in European equities? STOXX can be a valuable partner:
- Comprehensive, liquid and investable ecosystem
- European heritage, global reach
- Highly sophisticated customization capabilities
- Open architecture approach to using data
- Close partnerships with clients
- Part of ISS STOXX and Deutsche Börse Group
With a full suite of indices, STOXX can help you benchmark against the European stock market.
Learn how STOXX’s European indices offer liquid and effective market access.
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