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Sovereign Wealth Funds: Post-Crisis Trends
 
PIIS013122270003685-4-1
DOI
Publication type Article
Status Published
Authors
Sergey Chebanov 
Occupation: Leading Researcher
Affiliation: Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO)
Address: Moscow, Russian Federation
Journal nameMirovaia ekonomika i mezhdunarodnye otnosheniia
EditionVolume 62 Issue 12
Pages15-25
Abstract

The paper examines main features and trends in the activities of sovereign wealth funds (SWFs) after the global financial crisis (GFC) of 2008–2009. The eventual aim is to reveal and evaluate fundamental changes of SWFs’ strategies and their role in the world economy. The development of SWFs as state investment vehicles was extremely impressive before and during the GFC. The value of their annual operations boosted from 1.8 Billion US dollars in 2000 to 117.7 Billion US dollars in 2008, i.e. 65-fold. The post-crisis period brought a number of major shifts both in quantitative and qualitative patterns of SWFs activities. The growth rate of their fresh annual investment noticeably decelerated. The 2008 IMFs’ forecasts that SWFs’ assets under management (AUM) may reach as much as 10 Billion US dollars by 2013 did not come true as yet. The actual total, according to the most recent estimates, is about 7.4 Billion US dollars. Anyway, this is a quite substantial amount representing 10 percent of the AUM of all institutional investors globally (as compared to 4.5 percent in 2004). So far, SWFs continue to be a major group of international assets’ holders. An important trend within this group is steadily growing weight of non-commodity funds. In the period 2004–2016 their CAGR was 14.5 percent against 10.6 percent of commodity funds. Another noteworthy feature is that SWFs are now increasingly investing into alternative asset classes (in particular, private equity) rather than into traditional fixed-income instruments. The most unusual is that a growing number of SWFs show interest in technology/disruptive innovations investing (TDII), thus contributing to the modern digital revolution. In recent years leading SWFs tend to enter into the alternative assets-related projects not solely but in partnerships with private market players such as investment or venture funds. Some countries (in particular, Saudi Arabia, Russia) undertake efforts to transform their SWFs from purely financial institutions into drivers of deep re-structuring of national economies. The abovementioned changes are likely to have far-reaching consequences globally. Basically, SWFs will remain among powerful actors in the international investment playfield despite multiplying politically-motivated restrictions in Western countries. In the meantime, SWF 2.0 evolves into full-fledged market-driven investor with an active portfolio management strategy.

Keywordssovereign wealth funds (SWFs), global financial crisis (GFC), global economy, assets under management (AUM), alternative asset classes, technology/disruptive innovations, private equity, active portfolio management.
Received11.01.2019
Publication date14.01.2019
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