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SWFI First Read, January 7, 2018

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Chinese Foreign Reserves End 2017 with an Uptick

The People’s Bank of China announced that foreign reserves grew US$ 20.7 billion to US$ 3.14 trillion in December 2017. The central bank announced a full year increase in reserves to US$ 129 billion. Chinese government authorities had enacted measures to reduce monetary outflows out of mainland China. These measures include capital controls and measures to have large state-owned businesses reduce overseas corporate acquisitions. A weaker U.S. dollar could make the Chinese central bank reduce capital controls.

Charles Schwab to Liquidate Schwab Money Market Fund

Charles Schwab Investment Management moved to liquidate its US$ 8 billion Schwab Money Market Fund. The decision was made on December 12, 2017. The money market fund aims to redeem all of its outstanding shares on or about May 25, 2018.

Iranian Oil Tanker Crashes into Cargo Ship off China Coast

Sanchi, an Iranian oil tanker that departed from Iran’s Assaluyeh port on December 16, 2017, crashed with the Chinese cargo vessel CF Crystal off China’s coast near Shanghai. The oil tanker is owned by National Iranian Tanker Company. The tanker was headed to Daesan, South Korea to move roughly 1 million barrels of natural gas condensate.

The National Iranian Tanker Company is a subsidiary of the National Iranian Oil Company. The National Iranian Oil Company was privatized in 2009 and as of 2011 is mostly owned by Iranian pensions.

Apple Products Vulnerable to Meltdown

Cupertino, California-based Apple Inc., a major driver of the U.S. stock market and company owned by many large sovereign funds and pensions, revealed that all iOs devices, such as the iPad and iPhone, as well as Mac computers are affected by chip security flaws. These issues surround vulnerabilities known as Meltdown.

GIC Sells Arizona Biltmore to Blackstone

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Blackstone Real Estate Advisors, part of the Blackstone Group, acquired the 740-room Arizona Biltmore hotel, located in Phoenix, for US$ 403.4 million. The deal closed on April 20, 2018.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Acquires Stake in Growing Hedge Fund Phoenician Capital

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Mubadala Investment Company, through its unit Mubadala Capital, purchased a minority stake Phoenician Capital, LLC. Although terms and size of the deal were not disclosed, the agreement grants Mubadala Capital rights to invest in a fund managed by the New York-based firm, which generated respective returns of 40.8% and 33.0% in 2016 and 2017, against benchmarks of 12.0% and 21.8% for the S&P 500. The hedge fund runs the Phoenician Offshore Fund Ltd.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Large Asset Managers Continue to Move Operations Out of California

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In the 2010s, Fisher Investments, an investment firm run by Ken Fisher, moved a large number of employees from the Woodside and San Mateo campuses to a town called Camas in Washington, near Portland. Vanguard has a large operational presence in Arizona, while Charles Schwab Corporation has expanded its technology operations and client services in places like Denver, Dallas, Austin and Phoenix. Dimensional Fund Advisors moved its headquarters in 2008 from Santa Monica, California to Austin.

While asset managers reap profits and try to lower employee head count costs, looking to fly-over country seems appealing.

The Pacific Investment Management Company (PIMCO), part of the Allianz family, selected Austin, Texas as its new office to hire more client services and technology talent. The PIMCO Austin office will open later in 2018. PIMCO is headquartered in Newport Beach, California, with an office in New York City.

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