Saudi Arabia's central bank has pulled billions of dollars from at least two global asset managers in recent months as it tightens criteria for where it places reserve funds, people familiar with the matter said.
The withdrawals began before the start of the Iran war, according to those familiar with the transactions. Among the moves was a multibillion-dollar redemption this year from passive index-tracking funds at a single asset management firm, a person who asked not to be identified told Bloomberg News, which reported the action.
Sources said the central bank has not simply moved cash into short-term holdings; at least some of the proceeds were reallocated into strategies that have delivered stronger performance. In one instance, part of the redemption from a manager was reinvested into fixed income products that offer greater liquidity, people familiar with the matter added.
The institution undertaking these changes is the Saudi Arabian Monetary Authority, commonly known as SAMA. As the kingdom's primary reserve manager, SAMA oversees a portfolio comprising hundreds of billions of dollars. That portfolio is described as largely composed of liquid, low-risk global assets with the mandate to preserve capital and underpin financial stability.
Those close to the matter described the actions as a move toward more selective manager relationships and an emphasis on liquidity and performance within SAMA's reserve allocations. The redemptions affected both passive index-tracking exposures and allocations managed by at least two external firms, they said.
Details on the precise amounts withdrawn from each manager and the full set of strategies receiving the redeployed capital were not disclosed by the sources. What is clear from their accounts is that the central bank has been adjusting its placements across managers and products, with a portion of the funds moving into fixed income instruments that can provide increased liquidity.
SAMA's role as steward of the kingdom's reserves means such portfolio decisions are aimed at capital preservation and maintaining a readily available buffer to support the financial system. The recent withdrawals and reinvestments reflect that objective while highlighting a preference for mandates that combine liquidity and improved returns, according to the people familiar with the decisions.
Observers and market participants were not quoted in detail beyond the anonymous sources who provided the descriptions of the redemptions and reallocations. The full scale and longer-term plans for SAMA's manager selection and asset allocation were not specified in the accounts provided to reporters.