Sovereign wealth fund

A sovereign wealth fund (SWF) is state owned. Typically, it is funded by a country’s central bank from the accumulated reserves that arise from running a trade surplus with other countries. The fund is usually tasked with a specific investment objective that will benefit its country’s citizens.

In short, like any investor, its job is to earn a decent return on its capital while avoiding too much risk. For an oil-rich Gulf state, that might involve finding investments – say, London property – that diversify the state’s revenue streams (so rent is earned alongside oil money).

The range of investments such a fund can choose varies – some are restricted only to very liquid public securities, for example. The size of each fund varies too, but some are huge – the estimated value of all SWFs is more than $2trn.

MoneyWeek magazine

Latest issue:

Magazine cover
In the balance

How May 2015 could hit your pocket

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Russell Napier: deflation is coming – hold on to your cash

Financial historian Russell Napier talks to Merryn Somerset Webb about the next deflationary bust – why it's coming, what it means for you, and how you can survive it.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


27 November 1924: Macy's first Thanksgiving Day parade

On this day in 1924, New York department store Macy's held its first Thanksgiving Day parade. It would soon become a city institution, kicking off the run-up to Christmas.