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National Funds have established themselves as large, sophisticated global financial players through their range of investment activities across a variety of asset classes and markets, in both advanced and emerging economies.
The description ‘National Fund’ can apply to sovereign savings, pension and stabilisation funds and in some special cases to monetary authorities, central banks, and government investment corporations.
Characteristics of different types of National Funds
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Monetary
Authorities/
Central Banks
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Sovereign
Stabilization
Funds
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Sovereign
Saving
Funds
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Government
Investment
Corporation
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Sovereign
Pension
Funds
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In addition to traditional central banking functions.
Invest portion of excess reserves in higher yielding assets.
Represent a small proportion of central bank assets.
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Protect domestic economy against commodity prices swings.
Shorter-term horizon.
More conservative investment strategy.
Focus on liquid, relatively secure assets.
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Longer-term wealth creation and policy objectives.
More aggressive asset allocation.
Higher weight to growth assets.
No explicit liabilities.
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Further along the risk-return spectrum than Sovereign Saving Funds.
Purchase ownership stakes in entities.
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Government-related pension funds.
Explicit liabilities (i.e. individuals have direct claims).
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The underlying purpose of funds in their home economies and their funding sources generate significant differences among National Funds in terms of their size, asset allocations and investment approach. Despite their lack of homogeneity, however, many share similar characteristics. In particular, by virtue of their long-term implicit liabilities, they often have a long investment horizon which provides them greater scope to adopt highly-diversified asset allocations and sophisticated risk management practices, as compared with other investors.
The liability spectrum
Given their sovereign status, a further common feature among this investor class is a high degree of external scrutiny of their investment activities. This originates not only from the fund’s domestic stakeholders but more particularly from the international community. Consequently, National Funds carefully consider the impact of their investment activities on foreign markets, as well as on their reputation as responsible investors.
Top 20 Sovereign Wealth Funds
| Country |
Fund Name
|
Assets US $ Billion
|
Origin
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| UAE - Abu Dhabi |
Abu Dhabi Investment Authority |
$875 |
Oil |
| Saudi Arabia |
SAMA Foreign Holdings |
$433 |
Oil |
| Singapore |
Government of Singapore Investment Coporation |
$330 |
Non-commodity |
| China |
SAFE Investment Company
|
$311.6** |
Non-Commodity |
| Norway |
Government Pension Fund - Global |
$301 |
Oil |
| Kuwait |
Kuwait Investment Authority
|
$264.40 |
Oil |
| China |
China Investment Coporation |
$200 |
Non-commodity |
| Russia |
National Welfare Fund |
$189.7* |
Oil |
| China - Hong Kong |
Hong Kong Monetary Authority |
$173 |
Non-commodity |
| Singapore |
Temasek Holdings |
$134 |
Non-commodity |
| UAE - Dubai |
Investment Corporation of Dubai |
$82 |
Oil |
| China |
National Social Security Fund |
$74 |
Non-commodity |
| Qatar |
Qatar Investment Authority |
$60 |
Oil |
| Libya |
Libyan Investment Authority |
$50 |
Oil |
| Algeria |
Revenue Regulation Fund |
$47 |
Oil |
| Australia |
Australian Future Fund |
$43.80 |
Non-commodity |
| US - Alaska |
Alaska Permanent Fund |
$39.80 |
Oil |
| Kazakhstan |
Kazakhstan National Fund |
$38 |
Oil |
| Ireland |
National Pensions Reserve Fund |
$30.80 |
Non-commodity |
| Brunei |
Brunei Investment Authority |
$30 |
Oil |
Notes
*
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This includes the oil stabilization fund of Russia.
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**
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This number is a best guess estimation.
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***
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All figures quoted are from official sources, or, where the institutions concerned do not issue statistics of their assets, from other publicly available sources. Some of these figures are best estimates as market values change day to day. Updated October 2008.
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Source: SWF Institute
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