A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets
2. A Sovereign Wealth Fund (SWF) is a state-owned
investment fund composed of financial assets such
as stocks, bonds, real estate, or other financial
instruments funded by foreign exchange assets.
These assets can include: balance of payments
surpluses, official foreign currency operations,
the proceeds of privatizations, fiscal surpluses,
and/or receipts resulting from commodity exports
3. Sovereign Wealth Funds can be structured as a fund,
pool, or corporation. The definition of sovereign
wealth fund exclude, among other things, foreign
currency reserve assets held by monetary
authorities for the traditional balance of payments
or monetary policy purposes, state-owned
enterprises (SOEs) in the traditional sense,
government-employee pension funds, or assets
managed for the benefit of individuals.
4. Some funds also invest indirectly in domestic
state-owned enterprises. In addition, they tend to
prefer returns over liquidity, thus they have a
higher risk tolerance than traditional foreign
exchange reserves.
Funds may have their origin in:
Commodities - Created through commodity
exports, either taxed or owned by the
government.
5. Non Commodities - Usually created through
transfers of assets from official foreign exchange
reserves.
Read More:
Sovereign Wealth Funds their Rankings and their Asset Allocations
Globally
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