Sovereign Wealth Fund - Size of SWFs

Size of SWFs

Assets under management of SWFs increased for the third year running in 2011 to a record $4.8 trillion. There was an additional $7.2 trillion held in other sovereign investment vehicles, such as pension reserve funds, development funds and state-owned corporations' funds and $8.1 trillion in other official foreign exchange reserves. Taken together, governments of SWFs, largely those in emerging economies, have access to a pool of funds totalling $20 trillion. Some of these funds could in future be channelled towards funding development of infrastructure for which there is global demand.

Countries with SWFs funded by commodities' exports, primarily oil and gas exports, totalled $2.7 trillion at the end of 2011. Non-commodity SWFs totalled $2.1 trillion. Non-commodity SWFs are typically funded by transfer of assets from official foreign exchange reserves, and in some cases from government budget surpluses and privatisation revenue. Asian countries account for the bulk of such funds.

An important point to note is the SWF-to-Foreign Reserve Exchange Ratio, which shows the proportion a government has invested in investments relative to currency reserves. According to the SWF Institute, most oil-producing nations in The Gulf have a higher SWF-to-Foreign Exchange Ratio — for example, the Qatar Investment Authority (5.89 times) compared to the China Investment Corporation (0.12 times) — reflecting a more aggressive stance to seek higher returns.