In this post, I have listed the 10 largest sovereign wealth funds around the world in terms of assets. These wealth funds are becoming increasingly powerful players on the global financial scene.
But despite their rapid rise, they are often less well understood than other types of investment vehicles.
I will start by answering the question; what is a sovereign wealth fund?. After that, I will give you a brief history of the sovereign wealth funds.
What is a Sovereign Wealth Fund?
Sovereign Wealth Funds are investment funds, mostly state-owned and whose source of revenue are often the balance of payment surpluses, fiscal surpluses and in particular oil or gas resources. According to the Sovereign Wealth Fund Institute, over 88 countries own one, and sovereign wealth fund in hydrocarbon resource-rich countries are managing assets worth more than $4 trillion, with the Norwegian sovereign wealth fund alone having asset value of more than $1 trillion.
History of Largest Sovereign Wealth Funds
Sovereign wealth funds originated in the 1950s. The funds came about as a solution for a country with a budgetary surplus.
Kuwait Investment Authority was the first sovereign wealth fund. It was established in 1953 to invest excess oil revenues.
After two years, Kiribati created a fund to hold its revenue reserves in 1955.
Little new activity occurred until three major funds were created:
- Abu Dhabi’s Investment Authority (1976)
- Singapore’s Government Investment Corporation (1981)
- Norway’s Petroleum Fund (1990)
Over the last few decades, the size and number of sovereign wealth funds have increased dramatically.
There are more than 88 sovereign wealth funds, and according to the SWF Institute, has exceeding north of $8 trillion.
Which are the 10 Largest Sovereign Wealth Funds by Asset?
This is the list of the 10 largest sovereign wealth funds in the world by asset;
- Norway Government Pension Fund Global
- China Investment Corporation
- Abu Dhabi Investment Authority
- Kuwait Investment Authority
- Hong Kong Authority Investment Portfolio
- GIC Private Limited
- SAFE Investment Company
- TEMASEK Holdings
- Qatar Investment Authority
- National Council for Social Security Fund
What is the largest fund in the world?
Norway’s sovereign wealth fund is the largest in the world. The fund has over $1 trillion in assets. It is managed by the Norwegian Central Bank, the Norges Bank.
The fund was set up as the Petroleum Fund of Norway to invest the surplus from oil sales, but changed to its current name in 2006.
Some of the fund’s biggest equity holdings include Nestlé SA, Royal Dutch Shell (RDS.A), Amazon (AMZN), Apple (AAPL), Alphabet (GOOGL) and Microsoft (MSFT).
The size and number of the 10 largest sovereign wealth funds continue to grow. Sovereign wealth funds will remain a crucial part of the global economy in the future.
One report projects that if sovereign wealth funds continue to grow at their current pace, they will exceed the annual economic output of the U.S. and that of the European Union by 2025.
The emergence of sovereign wealth funds is an important development for international investing.
In conclusion, as regulation and transparency issues get resolved in the coming years, the funds are likely to take on a major role in shaping the global economy.