Sovereign Wealth Fund

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Sovereign Wealth Fund (SWF)

Funds owned by sovereign nations that invest the savings of an entire state, foreign exchange reserves, or excess liquidity.

Sovereign Wealth Fund

A government-owned company that invests that government's excess reserves. That is, if a country has a current account surplus or a positive balance of trade the government may deposit the excess funds into a sovereign wealth fund. The funds are invested in securities, companies, or projects in order to increase the government's net worth. Often a sovereign wealth fund pays for a government's social programs such as welfare or a state pension. The funds in a sovereign wealth fund are kept separate from the country's regular currency reserves. Sovereign wealth funds are common in oil-rich countries where the government owns a significant portion of the oil production facilities.

Sovereign wealth fund (SWF).

A sovereign wealth fund (SWF) is a government-owned enterprise that invests a portion of its country's foreign-exchange reserves in global financial markets.

These reserves consist of a balance of payments surplus, also called a current account surplus, that are created because the payments received in overseas currencies for the country's exports, such as natural resources or manufactured goods, exceed what its residents are paying for imports.

Unlike the traditional overseas investments that governments make to ensure liquidity, such as the purchase of US Treasury securities, SWF assets are separate from official reserves and are typically invested in the private sector to produce higher returns.

SWFs are controversial, in part because their investment strategies, portfolio holdings, and returns are generally secret and in part because of the concern that the sponsoring countries could exert substantial economic pressure on the companies and countries where they invest.

References in periodicals archive ?
representatives of sovereign wealth funds worldwide.
85 billion acquisition in 2006 of Peninsular and Oriental (P and O) Steam Navigation Company, a storied British shipping and logistics company, by Dubai's state-owned DP World, one the world's largest port management and terminal operators, sparked fears that governments could employ cash-rich sovereign wealth funds (SWFs) and state-run companies as political muscle.
S) has said that it has not received any investment offers from Saudi sovereign wealth funds, Reuters has reported.
In other cases, such as Kuwait, sovereign wealth funds have lost money due to bad investments, a sign that successfully managing oil wealth isn't a given, even for experienced oil-rich states.
As sovereign wealth funds around the world grow in size and number, they are becoming increasingly powerful players on the global financial scene.
Saudi Arabia's Public Investment Fund (PIF), one of the world's leading sovereign wealth funds, announced Tuesday that top speakers from the investment world had confirmed their attendance at the invitation-only Future Investment Initiative (FII) to be held in Riyadh on Oct.
Asset managers will be joined by speakers represent a range of sovereign wealth funds and pension funds including: Kirill Dmitriev - CEO Russian Direct Investment Fund; Jeffrey Jaensubjakij - Managing Director and Group CIO, GIC; Azman Mokhtar - Director & CEO, Khazanah Nasional Berhad Malaysia; and Shahmar Movsumov - Chief Executive Officer, State Oil Fund of the Republic of Azerbaijan.
The Fundo Soberano de Angola (FSDEA) has retained a high ranking on the latest Sovereign Wealth Fund Institute (SWFI) Transparency Index ranking for Q2 2017, cementing its place in the league of better managed sovereign wealth funds.
The rise of the world's sovereign wealth funds continues as more funds come into existence and the assets they hold grow as well.
The founder of Eaton Partners says the proliferation of sovereign wealth funds as private equity investors helps offset pension fund bans on placement agents.
GCC sovereigns because their trade exposure to the UK is limited and the size of their sovereign wealth funds offers resilience against potential fluctuations in the value of some assets.
SimCorp provides integrated, investment management solutions to asset managers, fund managers, asset servicers, pension and insurance funds, wealth managers, and sovereign wealth funds.