Frequently Asked Questions & Glossary
Sovereign Wealth Funds - special purpose investment funds or arrangements, owned by the general government. Created by the general government for macroeconomic purposes, SWFs hold, manage, or administer assets to achieve financial objectives, and employ a set of investment strategies which include investing in foreign financial assets. The SWFs are commonly established out of balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, fiscal surpluses, and/or receipts resulting from commodity exports.
Generally Accepted Principles and Practices,
Sovereign Wealth Fund - Pools of money derived from a country's reserves, which are set aside for investment purposes that will benefit the country's economy and citizens. The funding for a Sovereign Wealth Fund (SWF) comes from from central bank reserves that accumulate as a result of budget and trade surpluses, and even from revenue generated from the exports of natural resources. The types of acceptable investments included in each SWF vary from country to country; countries with liquidity concerns limit investments to only very liquid public debt instruments.
What are the purposes of Sovereign Wealth Funds?
Although every SWF has its own purpose of creation, we can specify some objectives they have in common:
- Generate high return on investment
- Ensure domestic economic stability
- Reduce the volatility in tax revenues and export income
- Diversify from natural resource exports
- Strengthen the regional development
- Accumulate savings for future generations
How big are Sovereign Wealth Funds?
Sovereign Wealth Funds assets under management are estimated to be worth $4.5 to $5 trillion.
For a detailed information see the ranking of the largest Sovereign Wealth Funds.
List of Abbreviations
ADIA - Abu Dhabi Investment Authority
CalPERS - California Public Employees Retirement System
CIC - China Investment Corporation
GCC - Gulf Cooperation Council
GIC - Singapore's Government Investment Corporation
GPF - Norway's Government Pension Fund Global
HKMA - Hong Kong Monetary Authority
KIA - Kuwait Investment Authority
KIC - Korea Investment Corporation
LIA - Libyan Investment Authority
NWF - National Wealth Fund (Russia)
QIA - Qatar Investment Authority
RNWF - Russian National Wealth Fund
SAFE - The State Administration of Foreign Exchange (China)
SAMA - Saudi Arabian Monetary Agency
SWF - Sovereign Wealth Fund