Sovereign wealth funds are investment vehicles owned by governments. They invest in a wide range of financial assets such as stocks, bonds, commodities, real estate, hedge funds, and even startups across the globe. The sovereign wealth funds (SWFs) are largely funded by the forex reserves held by a country’s central bank or revenues generated by commodity exports. Here we take a look at the top 10 largest sovereign wealth funds in the world.
The SWFs are of major fiscal and economic importance. They aim to maximize returns over the long-term. It’s worth pointing out that the Social Security Trust Fund of the United States and the Japan Post Bank hold more assets than any SWF on this list, but they are not considered sovereign wealth funds.
The ranking is based on the latest data from the Sovereign Wealth Fund Institute. The SWFs are ranked based on the value of assets under management (AUM).
Charlie Munger, Warren Buffett’s right-hand man today, is an accomplished investor in his own right. Just like Buffett, Munger had his own investment partnership (he was convinced to go into investing by Buffett, leaving behind a career in law) before coming to Berkshire Hathaway. However, unlike Buffett who followed a deep value investing strategy as Read More
10- Public Investment Fund, Saudi Arabia ($320 billion)
Founded in 1971, the Public Investment Fund of Saudi Arabia has $320 billion of AUM. It invests funds on behalf of the government of Saudi Arabia. The Kingdom aims to transform the PIF into the world’s largest sovereign wealth fund by 2030. It is on track to have $400 billion in AUM by the end of 2020. Saudi Arabia is transferring the ownership of Saudi Aramco to PIF, so it’s entirely possible for this SWF to become the largest in the world.
9- Temasek Holdings, Singapore ($375.4 billion)
Temasek Holdings was founded in 1974, and is owned by the government of Singapore. Though it’s a sovereign wealth fund with assets worth $375.4 billion, it operates differently from other SWFs. It behaves like a commercial investment firm, investing largely in equities and paying taxes like an investment firm. It has invested in many successful startups and large corporations across the globe.
8- SAFE Investment Company, China ($417.8 billion)
SAFE Investment Company is the Hong Kong subsidiary of China’s State Administration of Foreign Exchange (SAFE), which manages the country’s massive forex reserves. It has $417.8 billion in AUM. It invests mainly in companies listed outside China. Since its inception in 1997, it has invested in Total, British Petroleum, Australia and New Zealand Banking Group, and many other corporate giants.
7- National Council for Social Security Fund, China ($437.9 billion)
Headquartered in Beijing, the National Council for Social Security Fund is one of the big four Chinese sovereign wealth funds. It was established in 2000 as a solution to the country’s problem of the rapidly aging population. It will support future social security expenditures as China battles the rising costs of an aging population. It has $437.9 billion in AUM.
6- GIC Private Limited, Singapore ($440 billion)
The GIC Private Limited was founded by the government of Singapore in 1981 to manage the country’s forex reserves. It invests in equities, bonds, private equity, real estate, and natural resources across the globe. During the subprime mortgage crisis, it made numerous investments that courted controversy, including an $11 billion investment in UBS.
5- Hong Kong Monetary Authority Investment Portfolio, Hong Kong ($509.3 billion)
The HKMAIP is a sovereign wealth fund managed by the Hong Kong Monetary Authority, which is the de facto central bank of the city-state. It was established in 1935 with the primary objective of supporting the exchange value of the Hong Kong dollar and maintaining the integrity of Hong Kong’s financial system. It invests in equities and bonds across the globe.
4- Kuwait Investment Authority, Kuwait ($592 billion)
Established in 1953, the Kuwait Investment Authority is one of the oldest sovereign wealth funds in the world. The Kuwait government had set it up soon after the discovery of massive oil reserves to manage the state’s surplus oil revenues. It currently has $592 billion of assets under management. Its long-term objective is to offer an “alternative to oil reserves” to enable future generations to flourish in the post-oil era.
3- Abu Dhabi Investment Authority, United Arab Emirates ($696.6 billion)
The Abu Dhabi Investment Authority was established in 1976 by the Emirate of Abu Dhabi, which is within the United Arab Emirates. The ADIA’s primary source of funding is revenues generated by oil exports. It invests funds on behalf of the government of the Emirate of Abu Dhabi in equities, bonds, real estate and other assets.
2- China Investment Corporation, China ($941.4 billion)
The China Investment Corporation was established in 2007 to manage part of the country’s forex reserves. It has $941.4 billion of assets under management. It invests in a diverse range of assets across the globe. The Chinese finance ministry has a strong influence on its investment decisions. Some reports claim the CIC was established after a bitter spat between China’s central bank and the ministry of finance.
1- Norway Government Pension Fund Global, Norway ($1,072.8 billion)
Often referred to as the Oil Fund, it’s the world’s largest sovereign wealth fund with assets of $1.07 trillion. It crossed the $1 trillion milestone in September 2017. It was established in 1990 to manage the surplus revenues from oil exports. It has invested in close to 10,000 companies across the globe including Amazon, Nestle, Apple, Microsoft, Alphabet, and Royal Dutch Shell. The SWF is managed by Norges Bank, the central bank of Norway.