Investment Objectives of Sovereign Wealth Funds: A Shifting Paradigm
IMF Working Papers, January 1, 2011
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Bibliographic details
- Authors: Iva Petrova, Jukka Pihlman, Peter J Kunzel, Miss Yinqiu Lu
- Published: January 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455211968.001
Summary of central argument
- While SWF investment objectives to some extent reflect inherent characteristics, notable differences in strategic asset allocation (SAA) exist even amongst SWFs of similar types.
- The global crisis may have changed SWF’s asset allocations in ways that may not be ideal or justified in all cases and a review of investment objectives may be warranted.
- The paper argues for regular macro-risk assessments for the sovereign, the continued importance of SWFs as a stabilizer in international capital markets, and the active role they could play in international regulatory reform.
Key findings and analysis
- Differences in strategic asset allocation (SAA) persist even among SWFs of similar types.
- The global crisis influenced SWFs’ asset allocations; these allocation changes may not always be optimal or justified.
- SWFs have continued relevance as stabilizers in international capital markets.
- SWFs can play an active role in international regulatory reform.
- Regular macro-risk assessments for the sovereign are recommended to align SWF objectives with sovereign risk profiles.
Policy recommendations and implications
- Conduct a review of SWF investment objectives where changes in asset allocation since the global crisis may be unjustified.
- Implement regular macro-risk assessments for the sovereign to inform SWF strategy and asset-liability considerations.
- Recognize and preserve the role of SWFs as stabilizers in international capital markets.
- Encourage an active role for SWFs in international regulatory reform efforts.
Publication and document specifics
- Authors: Iva Petrova, Jukka Pihlman, Peter J Kunzel, Yinqiu Lu
- Date: January 1, 2011
- Series: Working Paper No. 2011/019
- Issue: 019
- Volume: 2011
- Pages: 16
- DOI: https://doi.org/10.5089/9781455211968.001
- Stock No: WPIEA2011019
- ISBN: 9781455211968
- ISSN: 1018-5941
- Subjects: Asset allocation, Asset and liability management, Business enterprises, Central banks, Economic sectors, Expenditure, Financial institutions, Pension spending, Reserve assets, Stocks
- Keywords: asset, Asset allocation, asset-liability management consideration, Business enterprises, cross-border operation, Global, Government Policy and Regulation, investment, Investment and Risk Management, investment horizon, Pension spending, Portfolio Choice, Reserve assets, reserve investment corporation, savings SWF, savings-type SWF, sovereign wealth fund, Sovereign Wealth Funds, stabilization SWF, Stocks, SWF, SWF objective, SWF performance, SWF resource, SWF website, SWF's ability, WP
IMF Working Paper: "Investment Objectives of Sovereign Wealth Funds: A Shifting Paradigm" (Working Paper No. 2011/019, January 1, 2011).