Investing for Tomorrow podcast Season 5, Episode 4
For years, global managers arrived in Dubai and Riyadh with a standard pitch, assuming the region would adapt to them. That assumption no longer holds. In December 2025, the universe of state-owned investors passed $60 trillion for the first time, while the Gulf’s seven largest funds accounted for 43% of all capital invested across the sovereign investor universe.
This conversation is part of the latest episode of the Investing for Tomorrow podcast, season 5, episode 4. Drawing on the Thinking Ahead Institute’s Asset Owner 100 research, host Louisa Minter-Kemp speaks with Laura Merlini, Managing Director, EMEA at CAIA Association, about the Gulf’s growing role in state-owned capital, the shift from scale to strategy, the rise of technology and AI, and what global managers need to learn from a region that is no longer simply adapting to the rest of the investment industry.
Read the full conversation below:
State-owned capital has just passed a historic milestone. What does its scale tell us right now?
The timing is perfect because the numbers confirm the story. The universe of state-owned investors now collectively manages around $60 trillion in assets, a historic milestone reached for the first time in December 2025. Within that, MENA sovereign wealth funds alone account for around $6 trillion.
Vision 2030 and its equivalents across the UAE, Qatar and Kuwait matter because they turn capital allocation into a strategic national project. These strategies function as live investment roadmaps. Every commitment to infrastructure, technology, clean energy, tourism and entertainment flows from a central vision of a more diversified, knowledge-based economy.
Financial performance is necessary, but it is not sufficient. The best strategies also show a tangible contribution to ecosystem development, translating into new industries, new skills and greater resilience.
The scale is striking. Middle Eastern sovereign wealth funds invested $127 billion in 2025, a 48% increase over the prior year. The Gulf’s seven major funds — PIF, Mubadala, ADIA, ADQ, the Investment Corporation of Dubai, KIA and QIA — deployed $119 billion, representing 43% of all capital invested across the entire sovereign investor universe globally.
The themes show the direction of travel. Sovereign investors committed around $36 billion to climate-related companies last year, while AI and digitalisation drove capital across asset classes. Around $15 billion went into AI-related investment in 2025, part of a $21 billion cumulative commitment since 2020. These are structural, multi-decade commitments, aligned with where these nations want to be.
What has changed in the Gulf over the past five years?
The most important shift is from scale to strategy. Five years ago, the conversation was dominated by the size of these funds and how impactful they were. Now the more interesting question is how they deploy that size.
They operate with a dual mandate: a formal fiduciary duty to provide competitive financial returns, alongside a national transformative goal. That duality is a structural advantage because it enables something very important: patience.
Patience is enormously valuable in private markets. The ownership structure means these funds can take a 20- or 30-year view and back multi-decade themes that a typical commercial investor might struggle to hold through volatility.
I often compare this to Shakespeare’s actors, who had to compete with the noise of the crowd. The public would pay a penny to stand close to the stage and even join in with the performance. Something similar is happening here: sovereign wealth funds and national political agendas are on stage together, interacting directly.
What has also changed is how the state-anchor model now integrates with global capital markets. In 2025, sovereign investors showed a clear appetite for fewer but larger transactions, including platforms and club deals, with average ticket sizes rising toward the half-billion-dollar mark. Almost 80% of Middle Eastern sovereign wealth funds plan to increase their private equity allocation, which is an important signal.
That level of activity also requires deeper global networks and teams, something both Thinking Ahead and CAIA cover extensively through the total portfolio approach.
Your piece, “Capital with a compass: how the Gulf is rewiring global private markets,” argues that capital is being deployed with a compass as well as a calculator. How do private markets in the region differ from elsewhere?
The central argument is that the Gulf is reshaping global private markets. The compass reflects the fact that capital is deployed with direction. It is not just scale; it is long-term national priorities.
In the article, I refer to Aesop’s fable of the fox and the stork because it illustrates a shift in power dynamics. For years, global managers flew into Dubai or Riyadh with a standard pitch. At best, they might optimise it for home regimes and tax regimes, but there was still an implicit expectation that the region would adapt.
That is now inverting. Regional investors are increasingly setting their own terms, including through Sukuk, Sharia-compliant structures, wrappers, covenants and co-investment platforms. This is a significant change in the narrative.
It is also why CAIA is responding directly to the demand. We are launching a dedicated micro-credential in Islamic finance on the CAIA platform, because professionals working in this space need structured and rigorous education.
How have you seen the total portfolio approach develop across the region?
I smile because we share a very important resource in Jayne Bok. She is board chair of CAIA Association and also head of investments for Asia at Willis Towers Watson. She is one of the few, if not the only, true experts in implementing TPA.
The total portfolio approach moves beyond traditional strategic asset allocation toward a unified, dynamic framework built around four dimensions: governance, factor lenses, competition for capital, and culture.
In the Thinking Ahead Institute’s study of 26 asset owners employing various forms of TPA, you found that TPA organisations outperformed SAA organisations over 10 years. That is an important signal to the market. It is not only a structure; it is a mindset shift, and it sits at the heart of performance.
The Middle East is fertile ground for embracing this transformation.
On technology and AI, how is it being used across the investment lifecycle and decision making in the region?
Technology is now embedded across the whole investment cycle: sourcing, screening, due diligence, portfolio monitoring, implementation, analysis and decision support.
What is distinctive about the Gulf sovereign funds is the speed and ambition of their adoption. They are already building for the next 30 years. Sovereign wealth funds committed $15 billion to AI-related investments in 2025 alone, with Mubadala, the Kuwait Investment Authority and the Qatar Investment Authority among the most active players globally.
There is also the build-out of data centres across the Gulf. In 2024, the GCC data centre market was already worth around $3.5 billion, and it is projected to exceed $9.4 billion by 2030, implying growth of around 18%. These investments span AI, cloud, smart cities and larger-scale projects.
They sit at the intersection of infrastructure, real estate and technology. The willingness to invest in the cloud, digital services and the picks and shovels of AI matters because it enables better risk modelling and responds to the demand for infrastructure. I expect the Gulf sovereign wealth funds to be heavily invested in the backbone of the digital economy.
Given the scale of this, will it have an impact on the wider investment industry?
For sure. As Gulf institutions adopt more sophisticated operating models, they raise expectations across the whole ecosystem.
For external managers, advisers and partners, success will depend less on reputation and past achievement, and more on the ability to integrate with a sophisticated, data-driven and strategically oriented environment.
It is competitive. It is less about branding and more about boldness, agility and being brave. That is a big lesson for everyone, and TPA can help.
As a framework, TPA points to larger teams, deeper skills, a stronger organisational environment, a rethink of remuneration models, and the capability to work across disciplines rather than in silos. Breaking down silos is central to portfolio management. It is something we can all learn from, and the framework offers a way to implement and unlock that potential.
What are the key calls to action for listeners?
Three things.
First, follow the continued professionalisation of these institutions closely — both the adoption of sophisticated frameworks like TPA and the behaviours behind their investment choices. The centre of gravity of global institutional capital is shifting toward the Middle East and Asia, so details that look small today may become very big in the long term.
Second, watch the strategic themes where Gulf sovereign wealth funds are investing: infrastructure, private credit, energy transition and technology. There is also a trend toward the institutionalisation of private wealth, with private wealth beginning to mimic some of these behaviours in broad terms. Keep your eyes open to where they invest, and to how these approaches are becoming mainstream architecture rather than niche instruments.
Third, and most challenging, watch how global managers adapt. In 2025, $132 billion, around 47% of all sovereign capital, flowed to the United States, which shows how globally active these funds are. But what they want is a deeper, long-term relationship, not a transactional one.
The formula is clear: co-design with them, do not export to them. Do your homework, build bridges, understand the policy priorities, learn Islamic finance frameworks and align with governance expectations. If your pitch in Dubai is the same as your pitch in London, you have not done your homework.
So the call to action is this: stop thinking of the Gulf as a source of capital, and start seeing it as a region that is actively rewriting the rules of what pensions, strategic and purpose-driven capital look like in this century.
