SOVEREIGN WEALTH FUNDS A statistical overview

Marko Maslakovic

Senior EconomistInternational Financial Services, London

www.ifsl.org.uk

$ trillion

Sovereign investment vehicles

Government controlled and owned pools of funds funded by official reserves, but managed and invested separately. Typically held in foreign assets and invested for the long-term. Some over 50 years old / more than a half at least 10 years old Vary in size, mgt. structure, sources of funds, use of funds (stabilisation, savings)

Growth of SWFs’ assets

To reach: $5 trillion by 2010 and $10 trillion by 2015

$ trillion

64%

36%

87%

13%Non-commodity

Commodity

$ trillion, end-2007

SWFs are, however, increasing at a greater pace and their influence on global markets will grow in the coming years

Global funds under management

Where is the money coming from?Global current account imbalances$ trillion

Shift in structure of global finance - rise in importance of Emerging Markets

United States

Oil Exporters

Asia

Euro Area

Sources of SWFs’ assets

•Commodity sources (around 2/3 of total)

Export of OilGasCopper, etc...

•Non commodity sources (around 1/3 of total)

Official foreign exchange reservesPension fundsFiscal surplusesPrivatisation receipts

by 2010 (60% commodity / 40% non-commodity)by 2015 (48% commodity / 52% non-commodity)

% share, end-2007

SWFs market share by continent

United Arab Emirates + Singapore + Norway + China + Saudi Arabia = 75% Highly concentrated – in total around 50 SWFs

Oil exporting countries’ foreign investments assets % share, end-2007

Commodity sources

Total: $4.1 trillion

Growth at a compound annual rate of around 20% since 2000.

Official foreign exchange reserves% share, end-2007

Non-commodity sources

Total: $6.5 trillion

Asian official FX reserves$bn

44% of world total

63% of world total

Other Asia

China

Growth at a compound annual rate of around 20% since 2000.

The UK’s position on SWFs

•The UK Government is commited to ensuring the UK remains an open and competitive market for international investment

•The UK has a regulatory, competition and national security framework that ensures that all foreign investment (whether from a SWF or not) meets the appropriate criteria