Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), has reported a comprehensive loss of $15.6 billion for 2022. This comes as the value of its investments in SoftBank Vision Fund and other technology ventures took a hit during a market downturn.
In the previous year, the PIF had recorded an income of $25.4 billion, according to its annual financial report published on Sunday.
Under the leadership of Crown Prince Mohammed bin Salman, the PIF made significant changes to its asset allocation in 2022. The proportion of its assets dedicated to Saudi stocks was increased from 24% to 32%. On the other hand, the portion allocated to International Strategic Assets, which includes investments such as English football club Newcastle United FC and a US infrastructure fund by Blackstone Group LP, was reduced from 20% to 10%.
The increase in local-stock investments was largely driven by the transfer of a 4% stake in the energy giant Saudi Aramco to the PIF in February 2022. This stake is currently valued at around $80 billion.
The PIF plays a crucial role in Saudi Arabia's efforts to diversify its economy away from oil dependence. Crown Prince Mohammed bin Salman envisions the fund as a vehicle to invest large sums of money in various sectors, including tourism, electric vehicles, and sports projects, within the kingdom.
The PIF did not disclose the figure for shareholder returns for 2022. However, it is worth noting that the S&P 500 Index dropped nearly 20% during that year. In comparison, the PIF's return in 2021 was approximately 25%, which was in line with the returns for investors in the S&P during the same period.
One of the major contributors to the PIF's loss was its investment in SoftBank Group Corp.'s first Vision Fund, which experienced a record annual loss of $32 billion in 2022. Despite the loss, the PIF's assets under management grew to $595.5 billion from $527.8 billion in 2021.
It is important to consider the recent positive performance of global equities, including those in the US and Saudi Arabia. As of now, estimates suggest that the PIF's assets have risen to approximately $777 billion, according to the Sovereign Wealth Fund Institute.
In conclusion, while the PIF reported a significant loss for 2022, the fund's continued focus on diversifying its portfolio and investing in various sectors signals its long-term commitment to reducing Saudi Arabia's reliance on oil revenues.