SOME central banks have taken a hit to their reserves amid inflationary pressures and geopolitical tensions, prompting others to mull higher allocations to China and the yuan, as almost all public asset owners explore new asset classes, products and investment strategies in the search for yield, a white paper by BNY Mellon says.

“Central banks are extending into equities, while public pension funds increase allocations to alternatives and sovereign wealth funds test digital assets and take more active roles in shaping market structure,” BNY Mellon said in its report, titled The Evolution of Public Asset Owners. 

Old assumptions that helped guide the strategies of public asset owners - including sovereign wealth funds, public pension funds and central banks that collectively hold over US$40 trillion in investible assets - have started to lose relevance.