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Investment Strategy of Sovereign Wealth Funds

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Energy, Natural Resources and Environmental Economics

Part of the book series: Energy Systems ((ENERGY))

Abstract

Sovereign wealth funds (SWF) are a new name for assets held by governments in another country’s currency. These funds are growing at an unprecedented rate and are becoming important players in global financial markets. In this paper, I describe how these funds are being invested and I develop a classification of investment options available for sovereign wealth funds.

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Notes

  1. 1.

    The balance of trade is the difference between a nation’s imports and exports. The balance of trade forms part of the current account, which also includes income from the international investment position as well as international aid. If a government is going to accumulate assets in its Sovereign Wealth Fund, the government should also run a surplus on the government budget. However, there is a high correlation between trade surplus and government budget surplus.

  2. 2.

    A SWF or risk management funds are not the only way a country can hold money. A country can also hold/own public pension funds, and state-owned enterprises. Public pension funds hold the funds that states promise their citizens. These funds have traditionally kept low exposure to foreign assets. State-owned enterprises are companies fully or partly managed by the state, each of which may have its own assets and investments.

References

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Author information

Authors and Affiliations

  1. Department of Accounting, Auditing and Law, Norwegian School of Economics and Business Administration (NHH), Helleveien 30, 5045, Bergen, Norway

    Trond Døskeland

Authors
  1. Trond Døskeland
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Correspondence to Trond Døskeland .

Editor information

Editors and Affiliations

  1. Business Administration, Department of Science and Management Sci, Norwegian School of Economics and, Helleveien 30, Bergen, 5045, Norway

    Endre Bjørndal

  2. , Department of Science and Management Sci, Norwegian School of Economics and Busine, Helleveien 30, Bergen, 5045, Norway

    Mette Bjørndal

  3. Dept. Industrial & Systems, Engineering, University of Florida, Weil Hall 303, Gainesville, 32611-6595, Florida, USA

    Panos M. Pardalos

  4. Business Administration, Dept Science, Management Science, Norwegian School of Economics and, Helleveien 30, Bergen, 5045, Norway

    Mikael Rönnqvist

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Døskeland, T. (2010). Investment Strategy of Sovereign Wealth Funds. In: Bjørndal, E., Bjørndal, M., Pardalos, P., Rönnqvist, M. (eds) Energy, Natural Resources and Environmental Economics. Energy Systems. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-12067-1_1

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  • DOI: https://doi.org/10.1007/978-3-642-12067-1_1

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  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-12066-4

  • Online ISBN: 978-3-642-12067-1

  • eBook Packages: EngineeringEngineering (R0)

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