What is a sovereign wealth funds?

Hello friends! Today we are going to look at the most interesting topic in investment.

Each country make has its own definition of sovereign wealth fund.

First Definition According to International Monetary Fund.

Sovereign Wealth Fund is a state owned ( Sovereign ) investment fund or entity which consist of large amount of money derived from country resoures or asset.

What is a Sovereign Wealth Funds?

Second Defination According to Council of foreign relation.

It is a large pool of foreign exchange investment asset controlled by a sovereign entity which are neither it’s foreign exchange reserved or pension assets.

Example. India has foreign exchange reserves for money exchange.This funds cannot be used for Investment , Reserved Bank Of India (RBI).

So this is not a Sovereign Wealth Fund.

Sovereign Wealth Fund institution is swfi institute.

Sovereign Wealth Fund Features

There are 4 major featured of this funds are followed.

The investment in this is mainly for a long-term period.Next I will briefly describe the feature.

  1. A Mechanism through which countries make investment.
  2. A plot of money often derived for commodities profits which is invested in shares, bonds , property or other areas of potential returns.
  3. Tend to preferred return over liquidity , therefore they are move risk tolerances than traditional foreign stock exchange reserved.
  4. Excludes assets managed for the benefits of individual.

Sovereign Wealth Fund Limitations

There are some limitations of the funds.

Some sovereign Wealth Funda are not as transperent as compare to others.

For example. One sovereign wealth fund may disclose their investment holdings regularly on the other hand .

Some Sovereign Wealth Fund may not disclose the investment details.

Dont Confused with

Sovereign Wealth Fund Vs Sovereign Bonds Vs Sovereign Wealth Enterprises

  • Sovereign Bond – A specific country issues this fund.The investor who invests in this Bonds ,investor gets a fixed interest rate.
  • Sovereign Wealth Enterprises – Controlled by Sovereign Wealth Fund.

World Top 10 Sovereign Funds

RankProfileTotal AssetsRegion
1Norway Government Pension Fund Global$1,289,460,000,000Europe
2China Investment Corporation$1,045,715,000,000Asia
3Kuwait Investment Authority$692,900,000,000Middle East
4Abu Dhabi Investment Authority$649,175,654,400Middle East
5Hong Kong Monetary Authority Investment Portfolio$580,535,000,000Asia
6Temasek Holdings$484,441,000,000Asia
7GIC Private Limited$453,200,000,000Asia
8Public Investment Fund$430,000,000,000Middle East
9National Council for Social Security Fund$372,068,000,000Asia
10Investment Corporation of Dubai$302,326,000,000Middle East
Rankings by Total Assets Source : SWFI

Which is the Sovereign Wealth F unds of India?

NIIF (National Investment and infrastructure funds) is a indian sovereign fund.

National Investment Infrastructure Fund Limited (NIIFL) is investment platform for international invester as well as Indian investors, offered to the Government of India.

NIIFL invests in asset like that infrastructure, private equity share and various other sectors with the aim of providing attractive risk-adjusted returns for investors.

NIIFL thinks long-term, believes in achieving returns by effectively executing its investment through financial investments, and is committed to the principles of sustainable investment.

NIIF Anchor Investor

  • Abu Dhabi investment authority
  • Australian Super
  • Canada’s Ontario teachers pension plan
  • Canada’s pension plan investment bond ( CPPIB )
  • Singapore temasek

Sovereign wealth fund generally invest across border’s and in any places they can find a good investment.

But NIIF is focused on investment in india.

Does Russia have any Sovereign Wealth Fund?

Russia has two main SWFs.They are as follows.

  1. Russian direct investment fund is focused only on investment in Russia.
  2. Russian national wealth fund is federal budget asset.This fund support pension system of the Russian Federation to guarantee long-term sound functioning of the system.

Friends, if you have any doubts about this, you can ask in the comments.Also, if you like the article, be sure to share it with your loved ones.

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