Saudi Arabia's PIF invests $4.65bn into energy, utilities and property ETFs in second quarter

More than $370bn has flowed into exchange trade funds so far this year

The New York skyline. Saudi Arabia's Public Investment Fund placed almost $1.6bn into an exchange-traded fund that invests in US property companies during the second quarter of 2020. Reuters 

Saudi Arabia's Public Investment Fund invested $4.65 billion (Dh17.08bn) in US-domiciled exchange traded funds in the second quarter of the year, as it focused more on sector-based funds than individual equities, according to a filing with the US Securities and Exchange Commission.

The fund's total holdings in US ETFs and equities totalled just over $10.1bn, the filing showed, up from about $8.76bn at the end of the first quarter of the year.

However, the composition of its investment portfolio changed, with a much higher concentration invested in ETFs, which are low-cost, open-ended funds that hold portfolios of assets such as equities, bonds or commodities.

PIF, which is Saudi Arabia's sovereign fund, also sold stakes in a number of individual companies including Boeing, Bank of America and Walt Disney. It did not immediately respond to a request for comment from The National.

In June, spurred by the potential of India's digital economy, PIF invested $1.5bn (Dh5.48bn/113.67bn Indian rupees) in Reliance Industries' Jio Platforms in return for a 2.32 per cent stake.

The fund, which manages about $320bn in assets, previously bought stakes in Uber Technologies, Tesla and SoftBank Group's Vision Fund to expand its global portfolio.

PIF's biggest investment during the quarter was in an ETF focused on utilities, into which it invested $1.86bn.

PIF is now the ETF's biggest stakeholder, according to market data.

The ETF had just over $12bn of assets under management at close on Thursday, and its biggest holdings were in renewables company Next Era Energy and Dominion Energy.

PIF also invested almost $1.6bn in an ETF holding $2.2bn of property stocks and $1.2bn in a $3.4bn materials sector fund, whose biggest holdings are in industrial companies Linde and Air Products.

ETFs continue to grow in popularity as they are liquid and low cost investments. The amount invested into ETFs globally hit a record of $6.66 trillion at the end of July, with more than $79bn attracted during the month, according to data published last week by London-based ETFGI, which tracks the sector.

About $373.16bn flowed into ETFs in the first seven months of the year, which is "significantly higher" than the $270.21bn of inflows in the same period last year, ETFGI said.

About $113bn has flowed into equity ETFs and more than $140bn has flowed into fixed income funds. ETFs backed by gold have attracted about $19.4bn.

PIF is pursuing a strategy of broadening its global portfolio, while also investing in key domestic projects as part of wider economic diversification plans to reduce Saudi Arabia's reliance on oil revenue.