10 LARGEST NATIONAL INVESTMENT FUNDS IN THE WORLD
National investment fund or government investment fund (Sovereign Wealth Funds – SWF) is a concept used to refer to a state investment fund with valuable assets such as stocks, bonds, property, and precious metals. … When collecting surplus revenue, a country can invest that excess money to earn profits.
Sovereign investment funds worldwide have total assets worth 7,100 billion USD, according to the Sovereign Wealth Fund Research Institute (SWFI), more than double the level of 3,400 billion USD at the beginning of 2008. Investment Investing in a variety of asset types, funds all aim at the sole goal of maximizing long-term profits.
Funds mainly obtain abundant assets from oil, through oil export activities. Typical examples are countries with abundant oil reserves such as Norway, Kuwait and Saudi Arabia. These funds are designed to act as a “cushion” against fluctuations in oil prices. In particular, in the past 2 years, the sharp decline in oil prices has had a significant impact on these funds.
CNBC provides a list of the world’s largest sovereign investment funds, ranked by total assets and data updated as of June 2015.
10. China’s National Social Security Fund
While most countries in the world have only 1 national investment fund, China has 4. One of them is the National Social Security Fund, which was established with the goal of dealing with aging. population growth, support for social security expenditures during the period of peak population aging. This fund is managing 236 billion USD in assets.
China is suffering many negative impacts from an aging population, in the context of the one-child policy (applied since the 1970s) causing the birth rate to plummet.
9. Qatar Investment Authority
Qatar’s National Investment Fund was established in 2005. Qatar is one of the world’s largest exporters of liquefied petroleum gas, so it has a huge budget surplus. Qatar National Bank estimates that at the rate of exploitation, it will take 138 years for Qatar to exhaust its gas reserves.
Currently, this fund is managing $256 billion and claims to have “built a global investment portfolio with many asset types and investments in many different regions around the world”.
8. GIC – investment fund of the Singapore Government
Established in 1981, GIC is one of the oldest funds on this list. The fund is currently managing $344 billion in assets.
According to information posted on GIC’s website, the fund was established to “protect and enhance foreign exchange reserves for Singapore’s future”. The fund is investing in more than 40 countries, including Vietnam.
7. Hong Kong Exchange Fund
Another Chinese fund is the Hong Kong Exchange Fund, which is managed by the Hong Kong monetary authority. The fund is used to support the HKD and is managing $400.2 billion in assets.
This fund mainly invests in bonds and stocks of OECD countries.
6. SAFE Investment Company of Hong Kong
Established in 1997, this is a branch of the Chinese foreign exchange management fund. With $547 billion in assets, the fund’s main goal is to manage China’s huge foreign exchange reserves.
This fund mainly invests in listed companies abroad, holding shares in large banks in Australia, New Zealand and large corporations in Europe such as Fiat Chrysler, ARM Holdings and Telecom Italia.
5. Kuwait Investment Authority (KIA)
4. China Investment Corporation (CIC)
CIC is the “flagship” of four national investment funds in China, responsible for managing part of foreign exchange reserves.
Launched in 2007, the fund’s initial goal was to “diversify China’s foreign exchange reserves and maximize shareholder returns on an acceptable risk basis.” However, there is much information that this fund was born from a conflict between the Ministry of Finance and the Central Bank of China.
CIC is managing 746.7 billion USD and investing in many places. Most recently, the fund bought shares in London Heathrow airport, Thames Water water company and Deutsche Bank’s headquarters in London.
3. SAMA Foreign Holdings
Oil-rich Saudi Arabia invests excess petrodollars in the SAMA Foreign Holdings fund being managed by the country’s central bank. SAMA’s main source of revenue is oil, but it also manages several Saudi pension funds.
SAMA fund is very secretive about its investment strategy and asset portfolio, but according to SWFI, this fund holds 757.2 billion USD and mainly invests in certificates of deposit, fixed income and stocks.
2. Abu Dhabi Investment Authority (ADIA)
ADIA was founded in 1976 and its main income comes from oil exports. This is the largest sovereign investment fund in the Middle East region, with assets worth 773 billion USD.
Like neighboring Saudi Arabia, ADIA also bought shares in a British airport and invested in many foreign companies. Last year, the fund bought 50% shares in three Hong Kong hotels in a deal worth up to 2.4 billion USD.
According to information published by ADIA itself, the fund is investing in 24 asset types and calculated in USD, the return (yearly) over the past 30 years is up to 8.4%.
1. Norwegian Government Pension Fund
The Scandinavian country owns the world’s largest sovereign wealth fund with $882 billion in assets. Funded by oil revenues, from 1998 to 2014, the fund had an annual return of 3.8% after accounting for management costs and inflation.
Like other national investment funds, Norwegian funds have increased the amount of capital invested in real estate in recent years. In 2014, 576 million USD was poured into the luxury real estate market in London and New York.
