MoneyVedam

Functioning of SWFs Every SWF is like a fund house - they have their own investment offices, fund managers and asset managers. Each SWF also has its own mission, return requirements and investment horizon (akin to an individual's financial plan). SWFs by their very nature are net positive FDI (Foreign Direct Investment) countries. Note that net negative FDI countries cannot afford to have a SWF since they are cash starved and need overseas capital to spur infrastructure and industry development (like India, Indonesia etc). However the mode of operation of these SWFs are not very transparent due to which they have raised several key concerns such as affecting market dynamics and effecting undue influence on politics of other nations. What about India? India has not reached the position of a net positive FDI yet. Infact India is a net negative FDI nation, which means it continues to depend and receive FDI to develop the nation. India has not yet exhausted domestic investments to...

This is a much debated topic at all levels of government and private bodies. Prior to taking a side, we need to understand what a Sovereign Wealth Fund (SWF) is, its purpose and how it should function to yield the desired result. A SWF is basically a pool of funds created from assets owned by a nation. The assets could be physical commodity(s) or the result of productivity gains of the economy (aka industrial and financial assets). Most commodity based SWFs are created by oil rich nations such as Saudi Arabia, Norway, Kuwait, Qatar, Abu Dhabi etc. Non-commodity based SWFs are based out of Hong Kong, Singapore & China. Basically the SWFs are owned and operated by the government or its agencies. SWFs - Purpose & Size The main purpose of a SWF is to ensure that the excess capital generated from a nation's assets are pooled together and invested overseas so as to generate additional income or acquire new assets, which in turn could be used for the nation's future genera...