Sovereign wealth funds withdraw $4.1 bln from US stocks in Q3 2020

Sovereign wealth funds withdrew cash from United States stocks in Q3 2020, while adding to their bond holdings at the fastest pace in at least three years.

Sovereign wealth funds pulled $4.1 billion from US stocks in the third quarter, while adding nearly $4.5 billion into US fixed income, Reuters reported, citing eVestment data on strategies managed by third-party fund managers.

The activity came ahead of the US presidential election in November, which sparked volatility on Wall Street in the week prior to the vote as investors worried about the possibility of a contested outcome and as coronavirus cases rose across the world.

The withdrawal from US stocks, the largest in at least three years, was likely not driven by the need for cash for governments, the reported said, citing Elliot Hentov, Head of Policy Research at State Street Global Advisors.

He also pointed to the recent increase in debt issuances by sovereign wealth funds’ governments, and that they had good liquidity ahead of the coronavirus crisis.