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A Portfolio Analysis of Sovereign Wealth Funds

64 Pages Posted: 6 Jun 2008  

Christopher Balding

Peking University - HSBC School of Business; ESADE University Faculties - ESADEgeo

Date Written: 06/05/2008

Abstract

Sovereign wealth funds have been subject to much commentary and little factual analysis. This study attempts to address the lack of hard data by combining both direct and indirect statistics to secure a more reliable understanding of how sovereign wealth funds invest and their impact on international finance and investment. The study comes to three conclusions. First, estimates of sovereign wealth funds inaccurately calculate their size, by inconsistently counting assets across countries, resulting in a misleading understanding of their size. Second, sovereign wealth funds have to date, acted as rational, economically driven investors, diversifying their portfolio by asset class and geographic region. Third, based upon the currently available data, there is little reason to believe that sovereign wealth funds are large relative international investors or have a large impact on international financial markets. Though countries would be wise to follow the development of sovereign wealth funds, the data does not currently support measures to restrict cross border investment.

Keywords: Sovereign wealth fund, Sovereign wealth funds

JEL Classification: F02, F36

Suggested Citation

Balding, Christopher, A Portfolio Analysis of Sovereign Wealth Funds (06/05/2008). Available at SSRN: https://ssrn.com/abstract=1141531 or http://dx.doi.org/10.2139/ssrn.1141531

Christopher Balding (Contact Author)

Peking University - HSBC School of Business ( email )

University Town
Nanshan District
Shenzhen, Guang Dong 518055
China

ESADE University Faculties - ESADEgeo

Mateo Inurria, 25-27
Madrid, 28036
Spain

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