Friday, January 27, 2012

Sovereign Wealth Fund

A Sovereign Wealth Fund (SWF) is an investment institution owned and controlled by a sovereign state (government) for the purposes of investing government controlled funds. Sovereign Wealth Funds are typically funded from trade surpluses, budget surpluses, foreign exchange reserves, and sometimes using income from natural resources or one-off significant asset sales. Sovereign Wealth Funds invest in all manner of instruments including public equity, private equity, bonds, real estate, gold and commodities, currencies, and other financial instruments. Sovereign Wealth Funds may be operated to serve one or more of the following purposes: preserving capital, providing for liquidity needs, growing wealth for future spending, purchasing strategic assets, spreading the proceeds of windfalls/short-term gains/surpluses across a number of years, funding future pension expenses, and as a safety reserve. The total assets under management by sovereign wealth funds is estimated as close to $5 trillion in 2012.

Similar Fund Terms:
 State Owned Investment Fund, SWF, Investment Authority, Stabilization Fund, Sovereign Investment Fund

If you have any further questions or would like to add to this fund management term, then please submit your thoughts below.

Fund Management Terminology and Concepts Explained:


  1. Although sovereign wealth funds seemed like an established force, there are circumstances when it could cause volatility in markets. Sovereign wealth funds may cause market disturbances in the long run.

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  3. Sovereign Wealth Fund seems like a very good investment entity. However, an investor must be knowledgeable of the different terms and conditions of this investment in order not to lose huge amount of money.

  4. Sovereign Wealth Fund is indeed an established institution used to serve different funding purposes. It's good to know that this institution is being funded from different Forex trade entities such as trade surpluses and budget surpluses.

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