Central banks and pension funds are embracing green and gold investments.

“FOLLOW the money,” encouraged the shadowy figure of Deep Throat during the Watergate crisis. His words might be wise counsel today for those worried about a Trump bump in global finances. According to a report issued on June 14^th by the Official Monetary and Financial Institutions Forum, a think tank, of the world’s top 750 central banks, sovereign funds and public pension funds almost half the respondents worried mainly about political hazards. Almost a third cited US and wider geopolitical risk as their greatest challenge. Brexit and a renewed euro area crisis accounted for a further 17%.

Collectively these institutions control $33.5 trillion of global assets, equivalent to 45% of global GDP. That is an increase of 1.4% from 2016 (but still down on the 2014 figure of $33.798 trillion). The Asia Pacific region remained the largest area with Assets Under Management totaling $12.7 trillion; 37.9% of the total. Four investment authorities from the region were in the top 10: the People’s Bank of China, Bank of Japan, Japan’s Government Pension Investment Fund and the China Investment Corporation.

Relative to sovereign funds and pension outfits, central bank assets declined in 2016. That is partly down to intervention in currency markets to stave off devaluation. In other cases, particularly among energy and commodity exporting countries, reserves have had to fill holes in national budgets, vulnerable to a strong dollar (the sovereign funds of Algeria and Kazakhstan have been particularly badly hit by low receipts from energy exports). Part of the 9% year on year fall in assets of China’s central bank, the People’s Bank of China, was down to investment in the Belt and Road initiative (although it maintained its number one slot with just under $3.1 trillion in assets).

Two sectors have caught investors’ eyes. Green bond issuance is expected to grow year on year by 30% in 2017, to $120billion, according to Moody’s. Central banks and pension funds in North America and Europe are the most enthusiastic investors, with the latter leading the flight from fossil fuel-related industries. (In 2017 Norway’s sovereign wealth fund divested 10 companies with significant exposure to coal.)

Gold holdings increased by 377 tonnes in 2016 to 31,500 tonnes; the highest level since 1999. At the time of a raging bull market in equities this gold rush reflects only partly the 9% increase in the price of the shiny metal in 2016. It also points to nervousness around the main reserve currencies and a diversification, particularly in emerging markets, from US assets.

Given the interest in gold and green investments, “you could by forgiven for thinking that something nasty in the global economy was lurking just around the corner,” says Martha O’ Hagan-Luff, an Assistant Professor of Economics at Trinity College Dublin. “Political uncertainty turns investors white,” she warns.