Sovereign wealth funds across the world have had a good year with most of them doubling their returns in 2017 due to a growth in global equity markets, a new study has found.

According to a study by Invesco Global Sovereign Asset Management, returns that wealth funds earned grew by 9.1% last year, up from 4.1% from the year before.

The study noted that the funds are allocating more to equities with average allocation to these increasing by 33%, up from 29% in 2017. The increase in equity allocations has been largely driven by an equity bull market.

Sovereigns in the Middle East also take riskier bets in the private markets space. Middle Eastern sovereigns are the most targeted in their programs, with allocations into private credit increasing by 44% and infrastructure increasing by 33%.

In fact, global sovereign allocations to private markets doubled over the past five years to 20%, with infrastructure and private credit being the most favored in 2018. A bullish market has boosted the equity allocations, although geo-political risks remained a major concern.

That Middle East sovereigns are the most committed users of active fund management, with an average of 65% of their portfolios being actively managed. Middle East sovereign investors also often pursue opportunistic strategies in less traditional, less efficient markets where active management can potentially deliver significant alpha, a term that refers to an additional return that a fund-manager provides an investor. They also tend to have a significant internal active equity team, which means that the cost implication of higher use of active strategies is muted.

Asian sovereigns have a relatively similar profile in being significant users of active management, driven largely by the perception that their local equity markets are less efficient than the US and Europe, as well as having longer average holding periods for their equity mandates.

Middle Eastern sovereign investors also seem to be inclined towards investments in less traditional private markets such as real estate, credit and infrastructure.

The report looked at 126 individual sovereign investors and central bank reserve managers from across the world with $17 trillion in assets.

The $1 trillion Norwegian Government Pension Fund is the largest sovereign wealth fund in the world, according to Sovereign Wealth Funds Institute. Middle Eastern wealth funds such as Abu Dhabi Investment Authority, Kuwait Investment Authority and SAMA Foreign Holdings also take the top spots as they actively continue to invest across the global markets.