China's Wealth Fund Is Diving Into a Crowded Pool
Even riskier, it’s not very liquid. CIC’s tilt toward alternative assets may prove ill-judged.
Come on in, if you can find space.
Photographer: STR/AFP/Getty Images
The world’s second-largest sovereign wealth fund is playing a dangerous game.
China Investment Corp. aims to have as much of 50% of its portfolio in alternative assets by the end of 2022. That means the $941 billion fund is diving deeper into illiquid investments including real estate, infrastructure, hedge funds and private equity just as such trades are becoming increasingly crowded. CIC will also be diminishing its exposure to public markets that have rebounded strongly this year. For all the jitters over weakening global growth and the trade war, U.S. stocks are nudging record highs again and the MSCI World Index has climbed 17% in 2019.