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What Is Sovereign Wealth Fund?

2010/11/27 16:12:00 71

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Sovereign wealth fund

"(Sovereign Wealth Fund).

They are different from the traditional government pension.

fund

It is also different from those government institutions that have simple reserve assets to maintain the stability of their currencies, but a brand new specialized and market-oriented active investment institution.

At present, sovereign wealth funds have been established in 22 countries and regions around the world, and sovereign wealth funds in other countries are also in the process of brewing.

Since 1990s, sovereign wealth funds have gradually risen and are now spread all over the world.

The establishment of sovereign wealth funds includes some developed countries and

Resources

Rich countries, including some emerging market countries and resource poor countries.

The number of global sovereign wealth funds varies.

A rough estimate suggests that the total assets of sovereign wealth funds are at least 895 billion dollars, of which the largest 5 funds have more than 70% of all similar fund assets.

According to this algorithm, the total assets of these funds are less than 1/4 of the global central bank reserve assets (US $3 trillion and 800 billion), less than 1/3 of the US government pension fund (US $3 trillion).

But there are also professionals who believe that the scale of sovereign wealth funds has reached as much as $2 trillion and 500 billion, and even estimated that it will reach US $12 trillion by 2015.

Although the calculation is different, it is certain that the development of sovereign wealth funds is fast and gradually becoming a force that can not be ignored in the global financial market.

It is worth noting that if China national foreign exchange investment company has a capital of up to US $200 billion, it will add another force to the global sovereign wealth fund.

According to Huijin's research, sovereign wealth funds are mainly derived from foreign exchange reserve surplus, natural resources export surplus and international aid fund. The motivation of its establishment mainly includes five types of sovereign wealth funds: stable, sterilized, saving, preventive and strategic, and there are two stages in management mode, namely, central bank direct management and specialized investment agency management.

The development trend of sovereign wealth funds has three characteristics: the rapid growth of the number of global sovereign wealth funds, the rapid expansion of asset scale and the increasing influence of the market; the scale of sovereign wealth funds is huge and the investment fields are extensive; many sovereign wealth funds have been in line with the scale of government pension funds or central bank reserve asset management institutions; sovereign wealth funds generally adopt specialized, market-oriented operation methods and diversified investment and operation strategies, so as to seek long-term investments and obtain higher returns.

Sovereign wealth management is now showing a clear trend of development: sovereign wealth management is gradually changing from the traditional liquidity management model aimed at avoiding risks to a more diversified and risk-taking asset management mode.

This pformation enables sovereign wealth funds to actively expand investment channels for reserve assets, construct more effective portfolios under effective risk control conditions, and achieve higher return on investment.

In view of this trend, the global financial market will face more and more sovereign wealth funds in the future.

Because of the diversification of sovereign wealth funds investment, investment preferences also tend to bear more risks. This will make the global stock market face more and more sovereign wealth funds in large numbers.