A New Report From Aite Group Reveals The Potential Of Sovereign Wealth Funds

Largely ignored for 50 years, sovereign wealth funds are capturing the attention of Wall Street and the world. A new report from Aite Group, LLC provides an introduction to sovereign wealth funds (SWFs). Essentially the investable assets of a nation,

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Largely ignored for 50 years, sovereign wealth funds are capturing the attention of Wall Street and the world.

A new report from Aite Group, LLC provides an introduction to sovereign wealth funds (SWFs). Essentially the investable assets of a nation, SWFs are managed for preservation and accumulation of wealth for the benefit of the given nation’s citizens. The report defines sovereign wealth funds, provides a list of the world’s largest SWFs, and examines motivations, restrictions and certain initiatives for transparency as they pertain to SWFs.

While sovereign wealth funds have been in existence for more than fifty years, they are now becoming visible in the broad market; particularly after making headlines for bailing out a few major US financial institutions in the wake of the 2007 credit crisis. Indeed, Wall Street firms are actively seeking the injection of capital that SWFs can provide. SWF assets are segregated from other government funds for the purpose of long-term investing, and they are typically comprised of a diversified portfolio with allocations to investments such as traditional listed securities as well as a wide range of alternative investments.

“Sovereign wealth funds are behind the recent – and necessary – bailouts of major US financial institutions,” says Denise Valentine, senior analyst with Aite Group and author of this report. “However, governments and some market participants are worried about the potential implications of SWF ownership of assets in terms of influence or control. Regulators in the countries targeted by SWFs are examining these concerns, and SWF governments typically conduct similar analyses. While geopolitical realities exist, governments must balance national security and self-interest with the free flow of capital in order to further global growth and prosperity.”

D.C.

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