Sovereign wealth funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors.
Edited by a Nobel laureate, a respected academic at the Columbia Business School, and a longtime international banker and asset manager, this volume examines the specificities of SWFs in greater detail and discusses the implications of their growing presence for the world economy. Based on essays delivered in 2011 at a major conference on SWFs held at Columbia University, this volume discusses the objectives and performance of SWFs, as well as their benchmarks and governance. What are the opportunities for SWFs as long-term investments? How do they fulfill their socially responsible mission? And what role can SWFs play in fostering sustainable development and greater global financial stability? These are some of the crucial questions addressed in this one-of-a-kind volume.
- Contents
- Acknowledgments
- Introduction
- 1 Keynote Addresses
- Sovereign Wealth Funds—Distinguishing Aspects and Opportunities
- The Contribution of Institutional Investors to Fostering Stability and Long-Term Growth
- Sovereign Wealth Funds as Stabilizers
- Financing Long-Term Investments After the Crisis: A View from Europe
- What Sovereign Wealth Funds Can Do to Alleviate Global Poverty
- The Sovereign Debt Problem
- 2 The State of Sovereign Wealth Funds
- Overview
- The Rationale for Sovereign Wealth Funds from a Development Perspective
- Sovereign Wealth Funds: Form and Function in the Twenty-first Century
- 3 Benchmarking and Performance Standards
- Introduction
- Stabilization Funds
- Tilt of Benchmarks
- Four Benchmarks of Sovereign Wealth Funds
- Which Financial Benchmarks and Other Incentives Work for Long-Term Investing?
- Further Considerations
- Panel Paper: The Four Benchmarks of Sovereign Wealth Funds
- 4 Fostering Development Through Socially Responsible Investment
- Introduction
- Impact Investing: A New Asset Class and Its Implications for Sovereign Wealth Funds
- Sovereign Wealth Funds as Catalysts of Socially Responsible Investing
- Objectives and Ethical Guidelines of Norges Bank Investment Management
- Building Emerging Countries’ Financial Infrastructure by Investing in Microfinance
- Further Considerations
- Panel Summary
- 5 Expanding Investment Horizons: Opportunities for Long-Term Investors
- Introduction
- How to Reward Long-Term Investors
- Sovereign Wealth Funds and the Shifting Wealth of Nations
- Compensation and Risk-Taking in the U.S. Financial Industry
- Building Long-Term Strategies for Investment of Sovereign Wealth
- Further Considerations
- Panel Summary
- Panel Paper: Capital Access Bonds—Securities Implementing Countercyclical Investment Strategies
- Panel Paper: L-Shares—Rewarding Long-Term Investors
- 6 Reducing Climate Risk
- Introduction
- Influencing Clean Innovations
- The Emerging Role of State Investors in the Governance of Global Corporations
- The Rise of Carbon-Free Technology
- Smart Energy Globalization
- Further Considerations
- Panel Summary
- 7 Managing Risk During Macroeconomic Uncertainty
- Introduction
- Macroeconomic Uncertainty and Managing Risk for Sovereign Wealth Funds
- Funds and Volatility
- Managing Uncertainty
- Key Issues
- Further Considerations
- Panel Summary
- 8 Managing Commodity Price Volatility
- Introduction
- Managing Commodity Price Volatility
- Chile and Copper
- Management of Commodity Price Risks on Sovereign Balance Sheets
- Further Considerations
- Panel Summary
- Panel Paper: Managing Commodity Risk—Can Sovereign Funds Help?
- 9 Sovereign Wealth Funds and World Governance
- Introduction
- Reconciling Sovereignty, Accountability, and Transparency in Sovereign Wealth Funds
- Sovereign Wealth Funds: Perhaps We See What We Want to See
- Restrictions on Cross-Border Investment
- The Value of Transparency
- Maximizing Autonomy in the Shadow of Great Powers
- Further Considerations
- Panel Summary
- Conclusion: Taking Stock—Analytical Challenges and Directions for Future Research
- Contributors
- About the Conference Organizers
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