What is a ‘Sovereign Wealth Fund ?
As per Investopedia.com, a Sovereign Wealth Fund (SWF) consists of 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 MENA region’s big oil exporters have developed the concept of state savings as of its original purpose of reducing the volatility of a state’s revenues and eventually help buffer drops in revenues. Amongst The world’s 10 biggest Sovereign Wealth Funds, see below, the GCC counts 4 number imminent members.
According to political risk consultancy GeoEconomica http://www.geoeconomica.com/ , and in view of the current oil prices stabilising at $45/$50, oil-funded Sovereign Wealth Funds are under pressure to withdraw, liquidate assets, and / or are managed separately from a county’s official currency reserves.
They could also be pools of money, any government stores in funds or corporations to generate profits. Globally, these stand at $4.9 trillion coming mainly from oil and gas SWFs. Below are the 10 most important SWF’s in the world. Wikipedia does list all existing ones.
- Norway’s Government Pension Fund Global
With a total worth of $847.6 billion, Norway’s fund comes mostly from oil revenues and generated an annual return of 3.8% between 1988 and 2014. Its portfolio comprises major pieces of real estate and properties worldwide, notably London, New York and discrete investments into 9,000 companies in 75 countries.
- Abu Dhabi Investment Authority
It is the largest SWF in the Middle East and currently managing $792 billion worth of assets, and various investments that earned it a 7.4% during the last 20 years.
- China Investment Corporation
Worth $746.7 billion, it is the largest non-hydrocarbon dependent fund has a diverse global investments and stakes in the UK’s main Airport and other British utility Co’s.
- Saudi Arabian Monetary Agency
It is naturally made of Saudi’s surplus petro-dollars and is controlled by the country’s central bank, Its assets are worth $598.4 billion.
- Kuwait Investment Authority
It is reputed for being the oldest SWF in the world and as such holds currently $592 billion derived from the country’s oil revenues.
- Hong Kong’s State Administration of Foreign Exchange Investment Company
This is an investment Company, currently managing around $474 billion. It was established in Hong Kong as a subsidiary of China’s Foreign Exchange with the main purpose of managing its foreign currency reserves.
- Hong Kong Monetary Authority Investment Portfolio
Worth $442.4 billion of assets, it is managed by the city-state’s monetary authority; it manages the Hong Kong Dollar.
- Government of Singapore Investment Corporation
One of the older funds, it is commonly known as GIC. It manages $344 billion.
- Qatar Investment Authority
Young Qatar Investment Authority’s aim was to plough the country’s significant budget surpluses into assets that are currently worth $256 billion.
- China’s National Social Security Fund
It is currently managing $236 billion worth of assets.