A Blueprint for Sovereign Wealth Fund Best Practices

Abstract

In this article, the author presents a blueprint for sovereign wealth fund (SWF) best practices. This blueprint is based on a scoreboard for the current practices of 44 SWFs. The blueprint in turn provides a basis for evaluating the results of the IMF - sponsored dialogue on SWF best practices. The author concludes this paper with a few observations on implementing SWF best practices. JEL Classification : F30, G29, G34

Emergence of sovereign wealth funds

“…Subsequently, we plot this probability against the total size, fraction in foreign assets, accountability/transparency and behaviour. All the data come from Truman (2008), where the latter are ratings determined on publicly available information on their investment and reporting quality. We include in the plots all funds, including those established before 1998 as well as pension funds, allowing the observation of difference between such funds with respect to recent resource funded SWFs.…”

“…Information on the years of establishment of the SWFs and on the fund management characteristics were collected from Truman (2008).…”

China's New Place in a World in Crisis : Economic, Geopolitical and Environmental Dimensions

“…Truman's (2008) data on SWFs around the world cover three such funds in China, which now ranks ninth in terms of offshore assets (with total assets of US$272 billion, of which US$135 billion is invested offshore). The total value of SWFs, according to Truman's data, is more than US$5000 billion, of which nearly US$3500 billion is international assets.…”

“…Concerns about SWFs have included the following ideas (Truman 2008): that governments might mismanage the funds, including paying insufficient attention to corrupt practices; governments might manage the funds efficiently but for non-profit purposes (for example, by directing them towards the protection of national champions or promoting particular development strategies at home); SWF decisions might lead to 'financial turmoil' (as it was alleged of hedge funds); and foreign governments might have conflicts of interest with the managers of the assets in which they invest.…”

Asset Class Diversification and Delegation of Responsibilities between Central Banks and Sovereign Wealth Funds

“…2 1 Setser and Ziemba (2009) estimate that assets for major sovereign wealth funds totaled $2.1 trillion at year-end 2008 (including $700 billion in non-reserve assets of Russia and Saudi Arabia, but excluding roughly $300 billion in non-reserve assets held by Hong Kong and other smaller funds). Truman (2008) estimates that SWFs managed just under $3 trillion at the end of 2007 (he also identifies another $2.3 billion under management by sovereign pension funds). His higher figure is partly attributable to higher estimates for funds managed by Abu Dhabi.…”