Sovereign Wealth Funds

Sovereign Wealth Funds

Sovereign wealth funds, despite massive analytical resources at their disposal, are also not immune to suffer investment and trading losses. Sovereign wealth funds certainly do not possess any crystal ball that they can gaze into the future to predict accurately how markets will trend going forward.
 
According to analysts at State Street Corp, sovereign wealth funds (SWFs) are seeking safer investments after facing robust criticism over losses linked to the credit crisis and a plunge in oil prices.

The US3.2 trillion worth sovereign wealth funds operate as government-owned, special-purpose investment vehicles.

Sovereign wealth funds are cutting risk, boasting liquidity and investing in their home markets after the credit crunch and a collapse in commodity prices led the value of their assets to plummet.

Sovereign wealth funds have also shrunk as governments tapped their capital reserves amid the global economic slump.

Singapore's Temasek Holdings Pte, Kuwait Investment Authority (KIA) and China Investment Corp are among the sovereign funds that helped struggling US investment banks replenish more than US$200 billion of capital.

Traditionally silent stakeholders, some sovereign wealth funds may consider taking a more active role as a result of their losses, according to State Street.


Thanks for visiting Hedge Fund Hedge Fund.