Investment Behaviour of Sovereign Wealth Funds

This research discusses the diversity of sovereign wealth funds (SWFs) and their increasingly important role for nations’ wealth and financial markets in general. The findings of the study suggest that macroeconomic factors influence a country’s probability of having a sovereign wealth fund, while the inherent features of a SWF affect its investment decisions. At the same time, the transparency of a sovereign wealth fund is dependent on both country-specific and inherent features. The results show that the probability of a country to have a SWF is enhancing with the rise in fuel export, ores and metals export, reserves and GDP per capita. Furthermore, sovereign wealth funds with stated long-term wealth creation purpose are more likely to invest in real estate. SWFs with purposes management of commodity-based revenues and internal functions are less likely to invest in private equity and infrastructure. Lastly, the transparency of sovereign wealth fund has a positive relationship with long-term wealth creation purpose and the general level of corruption and accountability in the country. Moreover, having the internal functions by a SWFs decrease its commitment to disclosure.