Soveriegn Wealth Fund
...of large foreign exchange reserves for strategic investments in debt and equity markets of other countries. It is a state-owned investment fund composed of financial assets such as stocks, bonds, property or other financial instruments.
The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings. These are assets of the sovereign nations which are typically held in domestic and different reserve currencies such as the dollar, euro and yen. Such investment management entities may be set up as official investment companies, state pension funds, or sovereign oil funds, among others.
SWFs are not something new. Kuwait created the Kuwait Investment Authority (KIA) in 1953. The UAE, Oman, Singapore and Brunei also created investment agencies to recycle their reserves holdings in the 1970s and 1980s. Norway and Malaysia did so in the 1990s. Russia followed suit more recently by creating a Stabilisation Fund in 2003, as did some other countries like Chile and Venezuela. Oil-producing countries (OPEC and Russia) have constituted over half of SWF funds (that is, commodity-based funds) in terms of assets under management as well as numbers. The UAE’s Abu Dhabi Investment Authority Fund (ADIA), which was established in 1976, is the world’s largest SWF.
Among the better known non-commodity-based SWFs in Asia are Singapore’s Government of Investment Corporation (GIC) (1981) and Temasek Holdings (1974). In fact, Singapore is the only country which has two separate agencies among the top ten SWFs. This said, strictly speaking though, since some of the sources of funding for the agencies also include pension contributions from Singapore residents, these...
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