A sovereign wealth fund (SWF) is a state-owned fund composed of financial assets such as stocks, bonds, property or other financial instruments. These are state savings which are invested for the purpose of investment returns.
Some wealth funds are solely owned by Central banks. Most SWFs originate in foreign currency reserves. Traditional investment vehicles for SWFs have been debt instruments. There are 40 SWFs worldwide managing $ 3 trillion.
NATURE AND PURPOSE
> SWFs are typically created when govts have budgetary surpluses
> SWFs are also created for economical or strategic reasons
CONCERNS ON SWFs
> Foreign investment by SWFs may create national security issues
> Motives of SWFs could be to stifle competition
> SWFs hold 2% of total assets traded worldwide
SWFs MOVES
> Govts of Singapore, Kuwait and Korea have provided $15 billion to Merril Lynch and Citigroup
> China's SWF has invested $3 bn in Blackstone IPO
WORLDS LARGEST SOVEREIGN FUNDS
Abu Dhabi Investment Authority - $875 bn
Govt Pension Fund of Norway - $350 bn
Govt of Singapore Investment - $330 bn
Kuwait Investment Authority - $250 bn
China Investment Corp - $200 bn
Temasek Holdings - $159bn
Australian Govt Future Fund - $61.3bn
Qatar Investment Authority - $50 bn
DOES INDIA NEED AN SWF ?
> The country’s forex reserves are at $315 billion along with a fiscal deficit
> RBI governor say there is case for SWF in India
> FM says no proposal for Sovereign Fund for India
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