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| The Rise of Sovereign Wealth Funds |
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| Written by Miranda Marquit | |
| Thursday, 20 December 2007 | |
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Individual countries are gaining investing clout. One of the more interesting shifts in investing today focuses on sovereign wealth funds. Thomson reports on companies that are benefiting from bailouts from sovereign wealth funds:
All of this begs the question: What are sovereign wealth funds? Basically, sovereign wealth funds are set up by the governments of nations. They are investment funds, usually managing the savings and wealth of a country. Many of the most successful sovereign wealth funds are those that make use of revenue that comes from state-owned commodities like oil. The Citi deal really brought oil dollars to the fore, for example. However, many countries still fund their sovereign wealth funds with foreign currency reserves. While some central banks run sovereign wealth funds, more and more are being managed by official investment companies, set up for that purpose. For ethical investors, this can muddy the waters. Many sovereign wealth funds are mysterious. (Norway's fund, which comes mainly from oil, is an exception; it has been commended for its transparency). Do you want to invest in a company that has allowed itself to be partially owned by a government awash in oil dollars? Or what about investing in a company that gets some of its capital from the Chinese government, which is known for its human rights abuses? This is what makes ethical investing so difficult. Where do you draw the line? And is it practical to think that there are companies that are absolutely clean in every way? Disclosure: I do not own stock in any of the companies above. However, I have bank accounts with Citi. C 
MS 
Miranda Marquit 
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written by not so fast , January 13, 2008 Tag it:           | |
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anyway, look for Congress to enact an uber-nationalist "Free Market Act" that's triggered by SWFs movement into utilities and agri-business. yes, "Free Market Act" will be another misnomer like the Clean Air Act, etc. it'll probably say something like they can only invest in US Treasuries, and at that point TIC data will turn sharply negative blah blah, you get the picutre.