What is a sovereign wealth fund?
Short answer
A sovereign wealth fund is a state-owned investment fund, usually financed by commodity revenues, trade surpluses or foreign-exchange reserves, that invests in assets such as shares, bonds, property and private companies.
Most relevant for: العربية
Where the money comes from
Governments set aside money in a separate pool rather than spend it all at once. Typical sources are revenue from oil and gas exports, budget or trade surpluses, privatisation proceeds and surplus foreign-exchange reserves. Funds are often run at arm’s length from the finance ministry or central bank, though governance varies widely.
Common purposes
Stabilisation funds cushion the budget when commodity prices fall. Savings funds build wealth for future generations as resources are depleted. Development funds invest in domestic industry and infrastructure. Pension reserve funds prepare for future public pension costs. Many funds mix several purposes.
Examples
Well-known funds include the Public Investment Fund (PIF) of Saudi Arabia, the Abu Dhabi Investment Authority (ADIA) in the United Arab Emirates, the Kuwait Investment Authority, the Qatar Investment Authority, Norway’s Government Pension Fund Global (managed by Norges Bank Investment Management), the Government of Singapore Investment Corporation (GIC) and Temasek in Singapore, and the China Investment Corporation. Assets under management change daily with markets, so this page does not quote figures.
Why they appear in the news
Because these funds hold large pools of capital, their decisions to buy stakes in companies, back startups or co-invest in deals are widely reported. Some funds publish annual reports and follow voluntary standards, such as the Santiago Principles, on transparency and governance.