Sovereign wealth funds in the Middle East are expected to deploy less capital this year than at their 2025 peak, as the Iran war strains Gulf government finances. Even so, investment is forecast to stay close to historic highs, according to the latest Mena Playbook from Global SWF, a New York-based data and research platform.

A Strong Year, but Below the Peak

In the first nine months of this year, sovereign investors from the Middle East and North Africa deployed more than $100 billion across nearly 250 transactions. For the purposes of the report, the region covers the Gulf states, Iran, Iraq and Maghreb countries such as Egypt.

That amounts to about 40 percent of global sovereign dealmaking. It also marks a three-year low for the region in both absolute and relative terms, the report says.

At the current pace, regional wealth funds are on track to finish the year having invested $136 billion across 327 transactions. That compares with $176 billion last year, but it would still make 2026 their second most active year on record. Meanwhile, sovereign and pension funds elsewhere have already deployed more capital than they did throughout 2025.

Gulf sovereign investors, led by the UAE’s Mubadala, are expected to remain more active than their five-year average.

War Costs Weigh on Assets

A key factor is the cost of the Iran conflict. Withdrawals by regional governments from funds such as the Kuwait Investment Authority and the Qatar Investment Authority to cover those costs could cause the first year-on-year decline in their combined assets under management in more than a decade, Global SWF said.

The firm expects a short-term effect on liquidity and global dealmaking, and a longer-term effect as sovereign investors continue to build resilience against future shocks. It projects a recovery by the end of the decade.

Mubadala Leads the Field

Abu Dhabi’s Mubadala is the region’s most active sovereign wealth fund in 2026, having invested $26.2 billion. It is followed by Saudi Arabia’s Public Investment Fund, the Abu Dhabi Investment Authority and L’imad, and the Qatar Investment Authority.

Where the Money Is Going

Twenty percent of investments through the end of September targeted the funds’ domestic economies. The United States remained the leading destination, receiving nearly half of the capital, followed by China, the United Kingdom and Singapore.

Technology was the sector most targeted by Gulf sovereign investors, followed by infrastructure and financial services.

Rachel Ziemba, a macro-strategy adviser in New York, said the shift toward home markets is not limited to this year. “This is not just a 2026 story, but the continuation of a trend in which we will see Gulf sovereigns investing more at home,” she said. She pointed to the need for economic diversification, along with new infrastructure and defence requirements triggered by the Iran conflict.

PIF Becomes More Concentrated

Investments by Saudi Arabia’s Public Investment Fund outside the kingdom have slowed and become more concentrated this year. Almost half of its international investments are expected to sit in just three companies: Electronic Arts, SpaceX and Warner Bros, if Paramount’s pending Gulf-backed acquisition goes through. The report described this as a concentration never seen among other sovereign funds.

Ziemba noted how much the approach has changed. In 2020, she said, the fund was opportunistically buying small stakes in many companies. Since then, it has pulled back from a diversified international portfolio into a more concentrated one.

What It Means

The picture is one of adjustment rather than retreat. Gulf sovereign funds remain among the most active investors in the world, and 2026 is still on course to be one of their busiest years. But the pace has cooled from the record set in 2025, and a growing share of capital is staying closer to home to support diversification, infrastructure and defence.

For global dealmakers, the message is mixed. The Gulf remains a major source of capital, yet short-term liquidity may tighten as governments draw on their funds. For the funds themselves, the challenge is to balance domestic priorities against international returns while building protection against future shocks. Global SWF’s forecast of a recovery by the end of the decade suggests the current dip is expected to be temporary, though much will depend on how long the conflict continues to weigh on regional budgets.

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