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Sovereign Wealth Funds: Active or Passive Investors?

Yale Law Journal Pocket Part, Vol. 118, p. 104, 2008

5 Pages Posted: 26 Nov 2008 Last revised: 4 Jun 2010

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; FundaciĆ³n Instituto de Empresa, S.L. - IE Business School

Date Written: November 24, 2008

Abstract

Sovereign wealth funds (SWFs)-capital pools created by governments to invest surplus funds in private markets-are increasingly important global financial actors. Many fear that the economic power of SWFs, which is measured in trillions of dollars, will be used strategically and politically. Are fears that SWFs will be used as political tools justified? If political use of SWFs depends on their control of U.S. firms, the answer is almost certainly "no." There is no significant evidence that SWFs have or will use control of U.S. firms to implement governmental policy. Indeed, American political and regulatory constraints will pressure SWFs not only to avoid control, but also to avoid exercising significant influence over U.S. companies in their portfolios. Instead, the present cycle of SWF investment is likely to be characterized by passivity.

Keywords: sovereign wealth

JEL Classification: G34, G38, K20, K22

Suggested Citation

Rose, Paul, Sovereign Wealth Funds: Active or Passive Investors? (November 24, 2008). Yale Law Journal Pocket Part, Vol. 118, p. 104, 2008. Available at SSRN: https://ssrn.com/abstract=1307182

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

FundaciĆ³n Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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