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Purpose – Study the investment and risk management approach of sovereign wealth funds when national wealth including natural resources is accounted for rather than only financial asset.

Methodology/Approach – Using a range of widely used asset classes, we simulate sovereign wealth fund returns when considering only financial assets but also under varying levels of national wealth holdings in oil. We optimize two-asset financial portfolios and three-asset portfolios when including oil to maximize the risk-adjusted returns.

Findings – Sovereign wealth funds by failing to invest for the national wealth portfolio are overlooking a major source of volatility. To reduce the level of volatility associated with yearly national wealth returns, allocating a higher percentage of fixed assets to high-quality fixed income and low-risk equities will maximize the risk-adjusted returns of national wealth for sovereign wealth fund states.

Social implications – By focusing solely on the financial assets managed by sovereign wealth funds, states are exposing themselves to significant national wealth risk.

Originality/Value of the paper – This is the first work to estimate the impact on national wealth of oil-dependent states by failing to account for volatile commodity prices through the investment strategies of sovereign wealth funds.

The purpose of this paper is to examine the propensity of sovereign wealth funds (SWFs) for shareholder activism and their potential impact on corporate governance.

The study highlights the relationships between SWFs and corporate governance and also applies eight antecedents/determinants of institutional activism to analyze whether SWFs have a predisposition for shareholder activism.

The study only finds two instances of SWF activism. Additionally, it finds that despite their mostly passive investments, SWFs possess a natural tendency toward shareholder activism. Some are more likely to engage in activism than others, however. SWFs with a higher proportion of their assets invested in equities, those with portfolios fully or partially constructed to emulate the broader financial markets through indexing, and those that depend less on external fund managers are the likeliest candidates for activism. The study also finds that the regulatory environment can curb the natural SWF inclination for activist behavior.

Due to the lack of transparency within the SWF universe, this study largely depends on the limited data available for sovereign wealth funds.

Given the growing importance of SWFs, managers, directors, and policymakers must assess SWF activism, its influence on corporate governance, and its implications for public policy deliberations.

This project, to the best of the author's knowledge, is the first study that applies tested financial models to SWFs in order to determine if they have inherent activist tendencies.

The purpose of this paper is to provide a detailed overview of the China Investment Corporation (CIC) and its structure, investment activities and possible future investments.

This paper uses a case study approach and builds up a picture of sovereign wealth globally and then focuses on the CIC and issues surrounding the fund.

The key implications from the research are that Asian sovereign wealth is going to be increasingly important in global investment. The CICs investment strategy is evolving and becoming evermore sophisticated. As the fund grows this will result in increased demand for local financial services and expertise and so where representative offices are located will impact on those financial centers.

Future research should expand the scope of the analysis to include other sovereign wealth funds and try to map out a comprehensive picture of sovereign wealth around the world.

This is one of the first papers to look at sovereign wealth and is believed to be the first paper to analyze Asian sovereign wealth and the CIC.

To discuss US, EU and UK tax-related issues that sovereign wealth funds should consider when investing in private funds.

Discusses various tax-related structuring, operational, risk-allocation, and economic matters that private funds, sovereign wealth funds and other non-US institutional investors should consider a series when evaluating potential private fund investments.

Despite the market disruption caused by the COVID-19 pandemic, sovereign wealth funds continued to make significant capital commitments to private funds in 2020 and, as the world emerges from the pandemic, are expected to make similar or greater commitments in 2021 and beyond.

Practical guidance from lawyers with wide experience in international tax planning and investment fund structuring.

Where there has been little in‐depth understanding of sovereign wealth funds, the purpose of this paper is to describe the complex nature of one of the world's largest sovereign wealth funds, Temasek Holdings (“Temasek”), whose “active” investment strategy has been emulated by a number of other funds.

The paper draws mainly on public data in developing a case history of Temasek.

Based on this data, the paper suggests how the firm's underlying strategy seems to be about pursuing the national interests of its sovereign shareholder in both a commercial and non‐commercial manner.

Consistent with a case‐based approach, the paper presents a single example of a sovereign wealth fund.

The aggressive manner in which Temasek has built up its international portfolio coupled with the mixed impact of its “active” investment strategy raise a number of issues about the nature of an important sovereign wealth fund.

The value of the paper is in its cogent, insightful picture of the development of a sovereign wealth fund that was a pioneer of this phenomenon.

This paper aims to investigate the idea of building responsible borrowing and lending into sovereign wealth fund (SWF) decision-making. SWFs, which currently manage US$8 trillion in assets, are influential institutional investors, but their role in sovereign debt markets needs to be further explored. In this context, this paper aims to critically assess the linkages and convergences between the Santiago Principles on SWF and the United Nations Conference on Trade and Development (UNCTAD) principles on responsible sovereign lending and borrowing.

This paper draws on legal scholarship, reports, policy papers and other open-source data to explore the role of SWFs in sovereign lending, borrowing and debt restructuring.

Building responsible borrowing and lending into SWF decision-making is feasible and justified on the grounds of both ethics and public duty. It is also justified in financial terms because it would protect SWFs from irresponsible lending and borrowing practices at the micro level while contributing to global financial stability at the macro level.

This is the first comprehensive study to juxtapose two important normative processes, the Santiago Principles and the UNCTAD Principles.

This study examines how Sovereign Wealth Funds (SWFs) investment choices affect green investments for the period 2013-2022. The assets that these funds manage amount to around $25,880bn, which makes them significant.

Apart from the Univariate analysis, this study uses two types of regression analysis for obtaining estimates to address the two questions: Whether the climate change policy drives investment choices of SWFs? and whether the market uncertainty influences the asset allocation choices of SWFs. The two regression techniques are ordinary least square regression and probit regression given the dichotomous nature of the dependent variable i.e., green investment types: renewables, non-renewables and alternate investments of the asset classes.

This study finds that sovereign wealth funds give priority to green investments and that their investment strategies remain unaffected by stock market risk. This analysis indicates that sovereign wealth funds serve as investment vehicles for controlling and diversifying revenues from fossil fuels in governments that are largely reliant on such income. This study also concludes that sovereign wealth funds provide a crucial impetus for the fuel-intensive sector to adopt innovative solutions that mitigate carbon emissions.

This study uses regression analysis, univariate analysis and propensity score matching for obtaining estimates to address the two questions. First, Whether the climate change policy drives investment choices of SWFs? and second, whether the market uncertainty influences the asset allocation choices of SWFs.

The findings of this research have economic and social implications. This study shows that SWFs prioritize stability and invest in infrastructure, and services over renewables and non-renewables. Therefore, SWFs help build efficient infrastructure that moves commodities and people, lowers transaction costs and boosts productivity. Infrastructure also provides clean water, sanitation, health care and education, improving society. This study has practical and wider implications as it covers SDGs 7, 11 and 13.

Furthermore, investing in emerging markets also allows sovereign wealth funds to diversify their portfolios geographically. This diversification helps reduce risk to the resource rich countries by spreading investments across different regions and economies. The results also confirms that the SWFs investment strategies are not affected by market risk. Their long-term orientation and inclination toward alternate investment strategies, specifically in the infrastructure and diversification strategy of investment across the regions is making SWFs more resilient thereby reducing the market risk exposure. This study confirms that the SWFs are exercising responsibility by filling the financing gap in the alternate investments that includes development of infrastructure. The statistically significant relationship between SWFs and infrastructure are evident in this study. This analysis reveals that sovereign wealth funds do not impede macroeconomic management or serve as a mechanism for politically influenced “investments.” Instead, ensure that their choices support long-term, stable efforts, such as infrastructure investments. By making infrastructure investments, SWFs may mitigate the risks connected to these projects. Their prudent and stable funds can help to mitigate the risks associated with uncertain regulations, unpredictable market conditions and project schedules.

SWFs along with other institutional investors in aggregate prefer more dollars to fewer and less risk to more. Evidently, transitioning toward a low-carbon technologies is systemic in nature and therefore we expect differential effects on the role of SWFs choices is related to the characteristics of the companies in terms of their exposure to exogenous occurrences, performance, costs of financing and so on. Our purpose is to investigate the role of fund institutions, specifically, SWFs in dealing with climate risk mitigation.

Purpose – To study the allocation in equity markets of sovereign wealth funds’ (SWF) investments with respect to other institutional investors. To analyze the role of political regimes in the sending and recipient countries as a determinant of the allocation of SWF investments.

Methodology/approach – We use mutual funds’ investments as a benchmark for SWF investment allocations. We collect data of SWF and mutual fund equity investments at the firm level and analyse them on a geographical and sector basis. We compare target investments for these two groups by looking at the political regime in the sending and recipient country, using different political indicators (Polity IV, Bertelsmann). We provide a comparison of SWFs and pension funds based on governance features related to investment.

Findings – We find that the fear that sovereigns with political motivations use their financial power to secure large stakes in OECD countries is not confirmed by the data. SWF investment decisions do not differ greatly from those of other wealth managers. Although there can be differences in the allocation, political regimes in the recipient countries do not play a role in explaining the allocation of sovereign wealth funds.

Social implications – Investment from public institutions, such as sovereign wealth funds, can have significant implications at the economic and social level. Sovereign funds are potential sources of capital for emerging economies, and therefore can enchance economic growth. It is important to understand to what extent public institutional investors behave differently from private investors. The “political bias” is not a relevant factor for sovereign funds, or for other institutional investors, for allocating their capital. More often than not, their asset allocation strategies converge with other large investors, these being driven by financial and not political bias.

Originality/value of the chapter – The chapter is an original contribution providing a firm-level analysis of equity holdings for two groups of institutional investors. Moreover, it emphasizes the political dimension of institutional investments, highlighting the priorities and constraints of public investors participating in financial markets. The chapter suggests that SWFs do not discriminate by the political regime of the recipient country in their asset allocation.

The purpose of this paper is to examine failures in internal and external controls associated with sovereign wealth funds (SWFs), using three caselets to illustrate the fraud triangle theory factors.

This study uses a qualitative research approach. Caselets are used to illustrate the fraud triangle factors associated with SWFs.

Ideally, SWFs would be characterized by opacity and the strategic flexibility to advance political goals, but this operational agility facilitates an environment ripe for fraud, in large part because there is little transparency with regard to their regulatory structure. Elements of the fraud triangle inherent in the structure of SWFs contribute to the fraud found in the three case examples.

The authors use three SWF fraud cases rather than statistical sampling of all SWFs, which limits the generalizability of the findings. Future research should explore additional recommendations for the evaluation of SWF governance.

The overlap between public sector governance and SWF governance creates an environment amenable to fraud, and as a result, fraud has occurred in several SWFs. Governance recommendations should take into account the lessons learned from previous SWF fraud cases.

Ideally, SWFs would be characterized by opacity and the strategic flexibility to advance political goals, but this operational agility may also facilitate an environment ripe for fraud, in large part because there is little transparency with regard to their regulatory structure.

To the best of the authors’ knowledge, this paper is the first to identify the fraud triangle risk factors associated with sovereign wealth funds using SWF fraud caselets.

The purpose of this paper is to critically discuss the participation of sovereign wealth funds (SWFs) in the corporate social responsibility (CSR) programmes. Sovereign wealth funds in emerging economies are often involved in corporate social responsibility. However, the 1 Malaysian Development Berhad (1MDB) scandal illustrates the possible use of SWF as a vehicle for corruption and abuse.

The primary objective is to develop good governance practices of CSR by SWFs that could limit corrupt practices. A case study approach is adopted to investigate the CSR involvement of two SWFs – Norway’s Government Pension Fund Global (GPFG) and Abu Dhabi Fund for Development (ADFD).

The finding shows that SWFs should not be directly involved in CSR. It is proposed that independent Non-government Organisations (NGOs), through a competitive funding model, could serve the CSR purpose of SWFs more effectively and bring socio-economic changes in emerging economies.

The funding model identifies the expected outcomes, priorities and uses of the funds. The funding committee should also be independent of the Board and transparent in its allocations.