10 Largest Sovereign Wealth Funds Control $5.7 Trillion

10 Largest Sovereign Wealth Funds Control $5.7 Trillion

Data presented by Buy Shares indicates the ten largest Sovereign Wealth Funds control assets worth  $5.7 trillion with 21% majority based in Asia. Sovereign Wealth Funds continue to grow, especially after the coronavirus pandemic.

Asia dominates the global Sovereign Wealth Funds (SWF) scene. The region accounts for 6 funds within the top 10, followed by the Middle East region, with 3 funds making up to the top 10. By countries, China dominates the list with three SWFs, being the China Investment Corporation the top Chinese fund managing $940.6bn.

As the research found, Sovereign Wealth Funds (SWF) continue to grow with more states opening funds and investing in top companies and assets. With large funds, most governments are poised to have more influence on the direction of the global economy. A sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country’s surplus reserves. SWFs provide a benefit for a country’s economy and its citizens.

The Norway Government Pension Fund Global accounts for the largest share at $1.18 trillion or 20.81%. The aforementioned Investment Corporation the top Chinese fund ($940.6bn) and the Abu Dhabi Investment Authority ($579.62bn) close the top 3. On the other end, China’s National Council for Social Security Fund has the least assets worth $325 billion.

Furthermore, China dominates the list with three SWFs totaling to approximately $1.68 trillion or 28.07% of the top ten SWFs globally. The Buy Shares research also overviewed the distribution of the largest SWFs globally. In total there are 89 notable SWFs.

Asia accounts for the largest share with 19 funds representing 21.34% of the global tally while the Latin America region accounts for the least share of SWF at 9.

As the report pointed out: “Despite joining the market more recently compared to North America, Asia now accounts for the largest share of SWFs thanks to rapid economic growth in the last two decades. Several countries in the region opted for multi-billion funds that are now competing on a global scale. Notably, China remains the most ambitious country from Asia in the SWF market. The country is standing out considering that most of its investment portfolios are defying traditions by exploring the private sector.”

With most economies plunging due to the coronavirus pandemic, SWFs will have a key role to play in the recovery journey. The research report notes that:

“After the pandemic has been fully been contained and all lockdowns are lifted, most governments are banking on SWFs to balance public responsibility with private sector interest. The post-pandemic economy will see intensified public spending. Increased spending will definitely call for scrutiny and demand for fiscal discipline.”

Most SWF are now diversifying their portfolios to focus on digital and biotech companies. Such sectors have remained resilient during the pandemic.

The funding for a SWF can come from a variety of sources. Popular sources are surplus reserves from state-owned natural resource revenues, trade surpluses, bank reserves that may accumulate from budgeting excesses, foreign currency operations, money from privatizations, and governmental transfer payments. In general, sovereign wealth funds usually have a targeted purpose. Some countries have sovereign wealth funds that can be similar to venture capital for the private sector.