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Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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He warned that Ghana, whose oil production is slightly higher than that of Seplat Petroleum, has already built close to $500 million in SWF over a short period of oil production.
Without the right prerequisites, which is governance in place, reserves and potential windfalls known, and enough revenue income available to diversify and strengthen a sustainable economy, no room will be there to handle an SWF approach.
Firstly, Universal Credit is increasing the number of people passing low income assessments and therefore meeting SWF criteria.
Summary: Properly managed, Sovereign Wealth Funds (SWFs) are a powerful tool to accelerate development and create prosperity.
The framework within which the SWF is being created is therefore more important than the vehicle itself.
Is that a common strategy of other jurisdictions and SWFs?
Many of the countries that use sovereign wealth funds (SWFs) have economies that are heavily reliant on one source of income, for example oil revenues in Norway and the Middle East.
The bigger the fund or SWF gets, the harder it is to find growth and return opportunities, even with Norway's SWF owning 1 per cent of all stocks worldwide.
Additionally, for each of the dependent variables we also estimated regressions with the use of incremental left-hand variables to analyze the potential influence of SWF ownership on changes in financial performance, rather than on the level of financial variables.
SWF boasts the third longest runway in the United States, shares its runway with the US Air Force National Guard, and operates as a general aviation and cargo facility.
In 25 years, the Norwegian SWF has accumulated assets that amount to almost $900 billion.
Chris Cummings, Chief Executive, TheCityUK, said, "The UK's position as the global leader for SWF investments is underpinned by factors such as its openness to foreign business, stable regulatory environment, transparent legal system, deep talent pool and the clustering of expertise in fund management right across the country.