Is it a fad or passing time in which the obsession with Sovereign Wealth Funds (SWFs) is increasing? Or is it a new concept? The answer is obviously no! It is only the recent bailing out of big financial houses post-subprime crisis that our exposure to the concept has increased.
SWFs are government-controlled fund, managed either by the government itself or on directions of the government. The government sometimes achieves objectives of national interest by pooling assets, which are owned by the government either directly or indirectly. These are commonly known as SWFs. SWFs fall into two categories, namely:
SWFs
are basically designed to reduce resource dependence through
vertical and horizontal sector diversification, to get better
returns on the pile of reserves, to shield the domestic
economy from the fluctuation in the prices of commodities,
to ensure the smooth consumption levels for the future,
to insulate the working class by providing pension, to support
or aid industry and help industrial growth and to promote
the strategic and political objectives. |
