July 23 (Bloomberg) -- Sovereign wealth funds, which own about $3 trillion in assets, may almost triple their investments in the next five years as oil and gas prices surge, State Street Corp. said.

That could lead to an additional $5 trillion of sovereign investments by 2013, according to a report entitled ``The Growing Role of Sovereign Wealth Funds'' issued by State Street, the world's biggest money manager for institutions. The funds' assets will grow 17 percent a year according to ``conservative'' estimates, State Street said.

``Some sovereign wealth funds owe their existence, and most owe their size, to the explosive growth that has recently occurred in official sector assets,'' said John Nugee, head of State Street's official institutions group, and the main author of the report. ``Commodities, oil in particular, are one key to this growth.''

The state-sponsored pools invested $58 billion in the first quarter, according to a report by consulting firm Monitor Group.

Record oil prices have swelled the coffers of producer nations including countries in the Middle East, Russia and Norway. Meanwhile, China's runaway trade surplus has pushed its foreign reserves higher, leading last year to the creation of the $200 billion China Investment Corp.

Sovereign funds will likely have increasing power to drive change and corporate restructuring at companies, especially financial services firms, State Street said.

``Over time'' the funds will allocate about 60 percent of their assets to equities, 30 percent to bonds and 10 percent to alternatives, Boston-based State Street estimated.

Sovereign funds are likely to fuel investor interest in emerging markets, State Street said. Total sovereign fund investment in hedge funds and private equity funds was $350 billion at the end of 2007, State Street said, citing Global Insight.

To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net.

Last Updated: July 23, 2008 07:09 EDT