Sovereign Wealth Funds
 

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The internet is full of information about the Sovereign Wealth Funds, they have been making newspaper headlines around the world. You can discover more about the SWFs with a comprehensive and complete personal online research. Most Sovereign Wealth Funds are government owned and they invest only government funds into high profit yielding investments. At SWFinvestguide we use our years of experience working with various SWFs to invest for private individuals like you into these same programs with the same principle of operation and revenue generation.

About Sovereign Wealth Funds
 

 

 

1. What are Sovereign Wealth Funds?

 

Sovereign Wealth Funds - SWFs are state-owned investment enterprises funded by foreign-exchange assets derived from budget and trade surpluses, and even from revenue generated from the exports of natural resources like Oil and Gas, these large pools of capital are invested in private markets abroad. Countries have used sovereign wealth funds as instruments through which to buy assets with their surplus foreign exchange, these assets serve as accumulated investments for the future which may be called upon at any time to help support government programs in the event of a sudden fall in commodity export revenues. Natural resources like oil are exhaustible, and their consumption and export leads to their depletion.

All countries have foreign exchange reserves. When a country, by running a current account surplus, accumulates more reserves than it feels it needs for immediate purposes, it can create a sovereign fund to manage those "extra" resources.
 
Countries operating SWFs allocate their excess funds to these firms which are separate, often largely independent operational entities, aiming at a systematic, professional portfolio management. For example, United Arab Emirates relies on its oil exports for its wealth; therefore, it devotes a portion of its reserves in an SWF that invests in other types of assets internationally that can act as a shield against oil-related risk. These wealthy countries create SWF to diversify their revenue streams thereby investing for the future for the benefit of the country's economy and citizens.
 
Sovereign Wealth Funds have existed since the early 1950s. Since then, more than 30 countries have established SWFs. The biggest funds are sponsored by the United Arab Emirates, Norway, Saudi Arabia, Kuwait, China and Singapore.
 
The top five funds account for about 70 percent of total assets. Over half of these assets are in the hands of countries that export significant amounts of oil and gas. Norway has a large sovereign fund, as do places as disparate as Alaska, Canada, Russia, and Trinidad and Tobago. About one-third of total assets are held by Asian and Pacific countries, including Australia, China, and Singapore.
 
As of March 2007, the United Arab Emirates and Saudi Arabia had, respectively, the first and third largest SWFs internationally, and Kuwait ranked sixth. Because of rising oil prices, Persian Gulf sovereign wealth funds have become the preferred investment vehicles of Kuwait, Qatar, and the United Arab Emirates.
 
Oil Boom Profits
Since 2003, oil producing states have reaped a revenue windfall. As oil increased from $27.69 per barrel on average in 2003 to as much as $79 per barrel in 2006, Saudi Arabia, for example, saw its gross domestic product-GDP increase by well over $130 billion over that time period, and the United Arab Emirates took home more than an additional $80 billion. Such revenues have generated enormous liquidity among the Gulf Cooperation Council GCC states—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—and created unprecedented opportunities for large-scale overseas investments.

 

 

2. SWFs: Nature & Purpose

 

Each fund has its own unique reason for its creation; furthermore, all funds have their own objectives.


Some Fund Objectives:
-Protect and stabilize the budget and economy from excess volatility in revenues/exports
-Diversify from non-renewable commodity exports like Oil
-Earn greater returns than on foreign exchange reserves
-Assist monetary authorities dissipate unwanted liquidity
-Increase savings for future generations
-Fund social and economical development
-Sustainable long term capital growth for target countries
-Political strategy


 

3. Size and Growth

 

The rise in commodity prices especially oil & gas and current account imbalances ensures that SWFs will continue to grow. As countries grow their currency reserves they will seek greater returns. The total size of SWFs worldwide has increased dramatically over the past 10–15 years. In 1990, sovereign funds probably held, at most, $500 billion; currently the US Department of Treasury estimates they control around $5 trillion and, based on the likely trajectory of current accounts, could reach $10 trillion by 2015. About half of the SWFs are located in Asia and the Middle East. This half of the SWFs manages about 80% of the assets. They include those held by China, Hong Kong, Singapore, Korea, Malaysia, Russia, United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Algeria.

 

4. Latest SWF Ranking

The latest ranking of the largest SWFs by assets under management is now available. According to the ranking, total value of SWFs assets is in the range of 4.7 to 5 trillion US dollars.
See the latest ranking»


5. Investing practices

 

They are investing overseas the savings that their countries generate that can’t be invested locally or spent on imports, the economic function played by SWFs is constructive. They help channel - or recycle - capital to countries that need it.

 

6. Transparency

 

Most SWFs are non-transparent, meaning they do not report their holdings or strategies to the Public. Some experts say they are passive investments, while others fear they are a matter of national security. These are causes for concern for many people, investors, and governments. Due to the non reporting of activities they remain essentially hidden from view as regards global financial markets.
 

7. Benefits offered by SWF investments?

 

Sovereign Wealth Funds have been operating in the international markets for almost fifty years and they have never created problems. During the recent financial turmoil, they have injected liquidity in the system at the time it was most needed, helping stabilize the markets. Their investments are often long-term and contribute to providing funds for companies, contributing to growth and jobs.
 

 

   
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Frequently Asked Questions
 

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Algeria Revenue Regulation Fund

Angola - Fundo Soberano Angolano


Australian Future Fund

Azerbaijan - State Oil Fund

 

Bahrain - Mumtalakat Holding Company

Botswana - Pula Fund

Brazil - Sovereign Fund of Brazil

Brunei Investment Agency

Canada - Alberta's Heritage Fund

Chile-Social and Economic Stabilization Fund

China-Africa Development Fund

China Investment Corporation

 

China - National Social Security Fund

China - SAFE Investment Company

 

France - Strategic Investment Fund


Hong Kong Monetary Authority Investment Portfolio

Iran - National Development Fund

Ireland - National Pensions Reserve Fund

 

Italian - Strategic Fund

Kazakhstan National Fund

Kiribati - Revenue Equalization Reserve Fund

Korea Investment Corporation

Kuwait Investment Authority

Libyan Investment Authority


Malaysia - Khazanah Nasional


Mauritania - National Fund for Hydrocarbon Reserves


New Zealand Superannuation Fund

Nigeria - Nigerian Sovereign Investment Authority

Norway - Government Pension Fund – Global

 

Oman - Investment Fund

Oman - State General Reserve Fund


Qatar Investment Authority

Russia - National Welfare Fund

 

Saudi Arabia - Public Investment Fund


Saudi Arabia - SAMA Foreign Holdings

Singapore - Government of Singapore Investment Corporation

Singapore - Temasek Holdings

Timor-Leste Petroleum Fund


Trinidad and Tobago - Heritage and Stabilization Fund

UAE - Abu Dhabi Investment Authority

 

UAE - Abu Dhabi Investment Council

UAE - Emirates Investment Authority

UAE - Investment Corporation of Dubai

 

UAE - IPIC

 

UAE - Mubadala Development Company


UAE - RAK Investment Authority

USA - Alaska Permanent Fund

USA - Alabama Trust Fund

USA - New Mexico State Investment Council

USA - Permanent Wyoming Mineral Trust Fund

Venezuela - FEM

Vietnam - State Capital Investment Corporation