Sovereign Wealth Fund Investment in Venture Capital, Private Equity, and Real Asset Funds

Journal of International Business Policy, Forthcoming

76 Pages Posted: 29 Oct 2022 Last revised: 26 Apr 2023

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University; Birmingham Business School; European Corporate Governance Institute (ECGI)

Pedro Monteiro

University of Scranton - Kania School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 24, 2022

Abstract

This paper examines the performance of limited partners’ (LPs) investments in venture capital, private equity, and real asset funds (referred to as “alternative asset funds”) from 52 countries around the world over the period of 1995 to 2020. The data indicate that sovereign wealth funds (SWFs) are significantly slower to fully liquidate and earn lower returns from their investments, particularly from their investments in venture capital funds. The longer duration and lower performance of SWFs is more pronounced for strategic SWFs than savings SWFs. We show that SWFs’ tend to invest in venture capital funds located in countries with lower quality disclosure indices. Additionally, SWFs are more often involved in buyout funds and in larger funds that have greater number of limited partners. Overall, the data indicate sovereign wealth funds make large investments in alternative asset funds with a longer-term view and earn lower financial returns, which is consistent with strategic and political SWF investment objectives.

Keywords: Sovereign wealth funds, Strategic investors, Active investors, Delegated portfolio management, Limited partnerships

Suggested Citation

Cumming, Douglas J. and Monteiro, Pedro, Sovereign Wealth Fund Investment in Venture Capital, Private Equity, and Real Asset Funds (October 24, 2022). Journal of International Business Policy, Forthcoming , Available at SSRN: https://ssrn.com/abstract=4258254 or http://dx.doi.org/10.2139/ssrn.4258254

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/douglas-cumming

Pedro Monteiro (Contact Author)

University of Scranton - Kania School of Management ( email )

320 Madison Avenue
Scranton, PA 18510
United States

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