The Role of Sovereign Wealth Funds as Activist or Passive Fund Managers

Forthcoming, Journal of Asset Management

22 Pages Posted: 31 Aug 2015

See all articles by Mark Mietzner

Mark Mietzner

Zeppelin University

Dirk Schiereck

Darmstadt University of Technology

Denis Schweizer

Concordia University

Date Written: August 30, 2015

Abstract

Sovereign Wealth Funds (SWF) have attracted a lot media attention with recent investments in publicly listed companies. Repeatedly, concerns have been raised, such as the fear of industrial espionage or geopolitical threats. We analyze whether SWF managers acquire stakes in foreign publicly listed firms 1) to play an active role which would support concerns or 2) passively select investments to increase the portfolio diversification, for instance. We find that SWF target firms are more profitable, pay higher dividends and have a higher financial stability than their industry peers. This is in line with SWF managers passively seeking for further portfolio diversification in foreign public equity markets. We cannot find an improvement in operating or market performance after the engagement of SWF. Overall, our results indicate strong evidence that SWF managers primarily act as passive investors instead of pursuing activism strategies like private equity funds.

Keywords: Sovereign Wealth Fund, Public Pension Fund, Shareholder Activism, Stock Picking, Event Study, Outperformance

JEL Classification: G14, G32, G34, G38

Suggested Citation

Mietzner, Mark and Schiereck, Dirk and Schweizer, Denis, The Role of Sovereign Wealth Funds as Activist or Passive Fund Managers (August 30, 2015). Forthcoming, Journal of Asset Management. Available at SSRN: https://ssrn.com/abstract=2653371

Mark Mietzner

Zeppelin University ( email )

Am Seemooser Horn 20
Friedrichshafen, Lake Constance 88045
Germany
+49 7541 6009-1232 (Phone)
+49 7541 6009-1299 (Fax)

HOME PAGE: http://www.zu.de

Dirk Schiereck

Darmstadt University of Technology ( email )

Universitaets- und Landesbibliothek Darmstadt
Magdalenenstrasse 8
Darmstadt, Hesse D-64289
Germany

Denis Schweizer (Contact Author)

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)

HOME PAGE: http://www.concordia.ca/jmsb/faculty/denis-schweizer.html

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