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Bain & Company today released The Future of Sovereign Wealth Funds: Four Imperatives for the Next Decade, a new report based on Bain’s first survey of sovereign wealth fund leaders. Drawing on Bain’s proprietary research and insights from leaders representing approximately 50% of addressable sovereign wealth fund assets under management (AUM), the report finds that sovereign wealth funds are on track to nearly double in size to $30 trillion by 2035, reinforcing their growing influence on global capital markets and economic development.
Over the past decade, sovereign wealth funds have expanded faster than any other class of institutional investor, reaching approximately $15 trillion in AUM in 2025 and achieving a 10.3% compound annual growth rate between 2020 and 2025. While strong portfolio performance and government capital injections have fueled this growth, the next decade will be shaped by a different set of forces, including higher interest rates, geopolitical fragmentation, technological disruption, volatility in hydrocarbon revenues, and the accelerating energy transition.
The report highlights the growing importance of the Middle East in the sovereign wealth fund landscape. The top 10 funds hold more than 75% of total sovereign wealth fund assets, concentrated across the Middle East, Asia, and Europe, with the Middle East accounting for approximately 40% of this total.
According to Bain, sovereign wealth funds are entering a new era in which scale alone will not guarantee success. Instead, funds will need to redefine how they deploy capital, create value, and operate to sustain long-term growth.
“The next generation of leading sovereign wealth funds will be defined by their ability to deploy capital strategically, create value operationally, and deliver their dual mandate in a targeted and sustainable way while delivering world-class returns,” said Grégory Garnier, partner, Bain & Company and head of the Private Equity and Sovereign Wealth Fund practice in the Middle East.
The report identifies four strategic imperatives that sovereign wealth funds are prioritizing over the next decade:
Recalibrating capital deployment
Sovereign wealth funds are increasing allocations to alternative assets, expanding direct and coinvestment strategies, shifting investment focus toward Asia, and diversifying funding sources through debt issuance and capital recycling. Delivering on dual mandates and value creation. Many sovereign investors are balancing financial returns with national development objectives, using capital to support economic diversification, build strategic industries, and strengthen long-term national competitiveness. Unlocking value from artificial intelligence. Sovereign wealth funds have committed more than $350 billion to AI-related investments globally while embedding AI into investment processes, portfolio management, and operational functions to improve performance and decision making. Redesigning operating models. Leading funds are evolving their governance, talent, technology, and organizational structures to support larger portfolios, direct investment strategies, and increasingly global operations. Lise Abi Jaoude, associate partner at Bain & Company and co-author of the report, said: “As sovereign wealth funds expand in complexity, the operating model becomes a critical source of advantage. Stronger governance, sharper talent models, better data and technology, and faster decision making will be essential as funds manage larger portfolios, pursue more direct investments, and operate across more global markets.” The report highlights a significant shift in how sovereign wealth funds invest. Alternative assets now account for approximately 30% of AUM across major funds, up from around 20% in 2015. Direct investments and co-investments have also become increasingly important, representing an estimated 50%–60% of private market deployments as funds seek greater control over investments and value creation.
AI is also emerging as both a major investment theme and a critical operational capability. Sovereign investors are deploying capital across the AI value chain, from semiconductors and data centers to applications and infrastructure, while leveraging AI internally to enhance investment analysis, risk management, and productivity.
“Scale gives sovereign wealth funds an advantage, but it is no longer enough on its own,” said Riccardo Molinari, partner at Bain & Company and co-author of the report. “As funds grow larger, the differentiator will be strategic clarity: where they deploy capital, how they create value beyond capital, and how effectively they align investment priorities with national economic objectives.”
As sovereign wealth funds continue to grow in scale and influence, Bain concludes that the next phase of growth will depend on strategic clarity across asset allocation, investment approach, value creation, national economic impact, and operating model design.
The full report, The Future of Sovereign Wealth Funds: Four Imperatives for the Next Decade, is available here.