Sovereign Wealth Funds (SWFs) have attracted increasing attention during the last few years, mainly due to their intervention in the rescue of the American and European financial systems. This intervention came at a time when the other financial systems were in a financial and economic turmoil. The SWFs injected funds in many banks like Citigroup, Morgan Stanley and UBS. They now manage an estimated $3.9 trillion invested in equity, bonds and hedge funds, and this amount is estimated to double by 2015. Despite a broad variety of definitions, the International Monetary Fund defines the Sovereign Wealth Fund as a government investment vehicle funded by the accumulation of foreign exchange assets, and managed separately from the official reserves of the monetary authorities. Though the SWFs, as active investors, have provided economy with undeniable benefits like supplying the market with necessary liquidity, there is a mystery shrouding them. This availability of very little information regarding their structure, objectives and investment strategies creates a lot of apprehension. This has led to the creation of favorable conditions for the emergence of protectionist laws in the OECD countries.
[...] The main commodity funds come naturally from countries possessing significant quantities of oil and gas: Abu Dhabi Investment Council (United Arab Emirates), Sama Foreign Holdings (Saudi Arabia), Government Pension Fund of Norway (Norway), Kuwait Investment Authority (Kuwait), National Welfare Fund (Russia) etc. Non-commodity funds manage revenues from official foreign exchange reserves or more rarely pensions reserves. During the last decades, some countries (mostly from Asia) have experienced an unprecedented growth of their foreign exchanges reserves and have accumulated amounts that were superior to their current trading needs. [...]
[...] Summer, L. (2007), “Funds that shake capitalist logic”, The Financial Times July TOTAL Annual Report 34. Truman E. (2007), Sovereign Wealth Funds: the need for greater transparency and accountability, Policy Brief, Peterson Institute for International Economics, Washington, D.C World Investment Report 2008, United Nations Conference on Trade and Development Ziemba, R. (2009), “China's Sluggish Q1 Reserve Growth”, RGE Monitor April. [...]
[...] However, they reckon that this available data might only be the tip of the iceberg, as most of the deals made by SWFs are private and thus not reported. According to the results of the survey, a third of SWFs deals by number have been carried out in OECD countries, the rest of them being done in emerging countries or even in the domestic markets of the sovereign fund. By value Miracky et alter, Monitor Group “Assessing the Risks : The Behaviors of sovereign wealth funds in the global economy” 24 The 17 SWFs are: ADIA, Azerbaijan, BIA, CIC, DIFC, GIC, Iran, Ireland, Istithmar, Kaznanah BHD, KIC, KIA, Libya, Mubadala, New Zealand, QIA and Temasek 25 IFSL Research, March 2009, “Sovereign Wealth Funds in 2009” 26 Cristopher Balding, University of California, Irvine « A portfolio analysis of sovereign wealth funds” 27 Idem transactions in OECD countries represent 61%. [...]
[...] et alter (2007), Assessing the risks: The behaviours of Sovereign Wealth Funds in the global economy, Monitor Group 28. Morgan Stanley Research (2007), The definition of a Sovereign Wealth Fund Raphaeli, N. (2008), “Sovereign Wealth Funds: investment vehicles for the Persian Gulf countries”, The Middle East Quartely, Spring 2008, p. 45- Santiso, J. (2008), “Sovereign Development Funds: key financial actors of the shifting wealth of nations”, OECD Emerging Markets Network Working Paper, October Shilov, A. (2009), "AMD spins off manufacturing capacities into The Foundry Company", XbitLabs February 32. [...]
[...] Given the source of the funds, sovereign wealth funds are usually divided into two categories: commodity and non-commodity SWFs. According to IFSL estimates, commodity SWFs total $ 2.5 trillion and non-commodity funds $ 1.4 trillion. The first category comprises the funds of oil producing countries, which have benefited from price increases in the 1970s and 1980s while the second category relates mostly to those of Asian countries which were eager to invest revenues from manufacturing growth. Both types of funds have claimed that they invest in order to increase their national wealth and to secure revenues for future generations. [...]
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