What's behind the $8 billion hit to Saudi Arabia's massive wealth fund
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The PIF's assets under management climbed 19% from the end of 2023 to $913 billion, making it one of the largest sovereign wealth funds on the planet.
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3 min read
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investment
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August 14, 2025
04:14 PM
CNBC
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Digital render of NEOM's The Line ject in Saudi ArabiaThe Line, NEOMSaudi Arabia's mammoth sovereign wealth fund saw a major decline in investments in its so-called gigajects, amounting to an $8 billion write-down at the end of 2024 — despite assets under management reaching nearly $1 trillion, according to its annual report.Gigaject investments declined by 12.4% to 211 billion Saudi riyal ($56.2 billion)
Meanwhile, assets overseen by the PIF climbed 19% from the end of 2023 to around $913 billion, making it one of the largest and fastest-growing sovereign wealth funds on the planet
The gigajects, which include the futuristic $500 billion Neom development, constituted 6% of the PIF's assets in 2024, down from 8% the year prior.The write-down comes amid lower global oil prices and a growing fiscal deficit for the Saudi kingdom, whose economy depends heavily on oil despite efforts to diversify it and substantial nonoil revenue growth.The PIF's annualized returns since 2017 dropped to 7.2% from 8.7% the previous year
The fund — which has significant holdings in a range of blue-chip companies Uber and Tesla, and owns major sports franchises LIV Golf and British soccer Newcastle United — was also seen broadening its funding base, raising nearly $10 billion in public debt and $7 billion privately.watch now2:0902:09Emirates NBD's Ed Bell on the impact of sub-$60 oilAccess Middle EastInternational investments fell to 17% of the portfolio, down from 20% the year prior as the fund honed its focus on domestic investments.Part of the reason behind the PIF's significant jump in AUM is thanks to more of Saudi state oil giant Aramco being allocated to the fund
But analysts note that if crude prices continue to fall, as some industry forecasters expect will be the case, the percentage of revenue that the Saudi government and PIF will be able to derive from those oil investments is ly to decrease in tow.Lower crude prices, and reduced Aramco dividends due to lower oil demand jections, are expected to limit PIF's investment funds
In the meantime, it is expected to increase its investments in high-growth areas artificial intelligence, analysts say.Budget overrunsNeom, a new region in western Saudi Arabia being built from scratch that is roughly the size of Massachusetts, is part of Vision 2030, which aims to diversify the Saudi economy away from oil revenues and create new jobs and industries for its burgeoning young population.The brainchild of Saudi Crown Prince Mohammed bin Salman, Neom is slated to contain a number of futuristic cities and developments that the kingdom expects will bring in millions of new residents and revolutionize living and nology in the country
However, budget overruns, operational complications and global oil market conditions have forced the kingdom to scale back or entirely shelve some of those jects, sources who have worked on Neom have told CNBC.The cost of Neom as a whole has been estimated to be anywhere between $500 billion and $1.5 trillion
After many years of seemingly unlimited spending, 2024 began to see an abrupt shift as the Saudi budget deficit grew and the price of a barrel of oil fell well below what the kingdom needs to balance its budget.
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