A study released Monday by Invesco shows that North American sovereign wealth funds have been hardest hit by the steep drop in energy prices.
While sovereign funds in the U.S. and Canada were set up thanks to state surpluses in commodity-rich regions, “the timing of the fall in the oil price has been particularly challenging for state governments” in North America, the report says.
In fact, 80% of North American sovereign investors expect funding to be reduced vs. 42% for oil-funded sovereigns in the rest of the world.
Still, North American sovereigns indicate that they are confident their assets are protected from the government. In contract, 67% of sovereigns in countries outside North America with a high dependency on oil expect withdrawals if oil prices remain below U.S. $40 per barrel for two years, according to the research. (Oil traded near $63 on Monday.)
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Overall, sovereigns seem confident in their ability to manage the impact of withdrawals; they note they are “better placed to manage these challenges than before the financial crisis in 2008.”
(The survey results are based on the polling of nearly 60 professionals with sovereign wealth funds, government pension funds and central banks.)