Recognition of Strategic Development Factors for Sovereign Funds

A clear majority of sovereign wealth funds are keenly interested in selecting assets based on risk-adjusted investment returns. The purely financial sovereign fund investor ignores strategic development as a factor. It is true that some SWFs have a strategic development nature or use strategic development as a possible reason when making a larger than usual investment. Some investors like the Korea Investment Corporation (KIC) will have a separate allocation to these types of investments.

After examining transactions through the Sovereign Wealth Fund Direct Transaction Database we can draw some conclusions that Middle Eastern and some Asian sovereign wealth funds use a form of strategic development as a factor when allocating funds to major investments. Portfolio investor objectives tend to play a major role, even in national strategic investments.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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