Sovereign Wealth Fund

Good Essays
Topics:
Sovereign Wealth Fund
The purpose of this report is to analyze the myths associated with Sovereign Wealth Funds (SWFs) and provide a more balanced view of SWFs. The common misconceptions regarding SWFs that have been identified by David Murray are:
1. Homogeneity of SWFs: It is believed that SWFs are a homogenous entity, which requires uniform standards and benchmarks. However this has been negated by scholars like Barbary, who are of the opinion that though SWFs can be said to comprise of a distinct investor group, their membership is diverse. Within this group, the funds are completely different (Barbary et al, 2010).The various SWFs have different objectives, investment strategies, governance, while the inaccurate perception of SWFs remains one of their uniformity (Murray, 2011)
2. Standardized benchmarking: Based on the ill-founded premise that SWFs are homogenous, many academics believe that SWFs need to have standardized benchmarking. The concern with universal benchmarking is its tendency to neglect country-fund specifics (Tsani et al, 2010). SWFs, with their different objectives and diverse investment strategies cannot be expected to adopt universal benchmarks, but rather the scale of these standardizations need to be adapted and modified for the particular SWF.
According to Murray (Murray, 2011), forcing SWFs to follow a standard benchmark may lead to unsatisfactory financial results. “Rules that maximize outcomes for certain funds, will be ill-suited for others… ‘Best Practices’ assume there is only one way to achieve fund outcomes. SWF regulation needs to abandon a ‘one size fits all’ approach in favour of context-sensitivity and diversity accommodation” (Murray, 2011 p. 8)
3. Uniqueness of SWFs: SWFs are erroneously considered to be different from other investor groups like mutual funds, due to their status of being government sponsored. However, in a study conducted by the OECD, it was found that there was “no difference between the

You May Also Find These Documents Helpful

  • Powerful Essays

    Sovereign Wealth Funds

    • 5139 Words
    • 21 Pages

    Mary Political Economy January 10, 2010 Do Sovereign Wealth Funds Pose a Security Threat to Western States? Sovereign wealth funds have been on the international economic scene since the middle of the 20th century. The Kuwait Investment Authority, for example, was created in 1953. (Lyons, p.25) However, until lately they had gone either unnoticed or ignored by the majority of political commentators. Several factors have brought them to the center of attention in economic and political…

    • 5139 Words
    • 21 Pages
    Powerful Essays
  • Best Essays

    BRIEFING PAPER Should India Establish a Sovereign Wealth Fund? New Delhi will soon take a final call on the issue of setting up of a sovereign wealth fund (SWF). The idea of setting up an Indian SWF has been going around since 2007 when China established its major sovereign wealth fund, China Investment Corporation (CIC), with an initial capital fund of $200 billion. However, this time the proposal has received strong support from India’s corporate leaders who recently suggested the…

    • 2163 Words
    • 9 Pages
    Best Essays
  • Good Essays

    Sovereign

    • 1029 Words
    • 5 Pages

    Sovereign According to Thomas Hobbes in order for people to “defend them from the invasion of foreigners, and the injuries of one another, is to confer all their power and strength upon one man” (Bailey 199). This statement means that in order for the people to be safe there needs to be an authority to look after them. Hobbes explains that this authority is a sovereign which has supreme rank and can carry the commonwealth. The commonwealth according to Hobbes is “one person of whose…

    • 1029 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Sovereign Risk

    • 1607 Words
    • 7 Pages

    Research Question: Country/Sovereign and Risk Assessments have evolved to become an integral part of international lending. Explain the factors to consider in determining the overall Sovereign/Country risk and why these factors are critical. What is the Bahamas' experience in its Risk Assessments? Financial institutions increasingly conduct business abroad in order to diversify and expand their sources of revenue and profitability. This strategy of international lending exposes the bank to country…

    • 1607 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    Sovereign Immunity

    • 5113 Words
    • 15 Pages

    Sovereign Immunity is a principle of public International Law as per which a state and its instrumentalities ( its officials, organs or agents) cannot be sued before courts of a foreign state, in other words, court of one state cannot sit in judgment on another state. This immunity was granted to the State to enable it to carry out its public functions effectively and maintain international relations. Under the principles of International Law all states are equal and sovereign, thus a need was felt…

    • 5113 Words
    • 15 Pages
    Powerful Essays
  • Powerful Essays

    Sovereign State Model

    • 1679 Words
    • 7 Pages

    the need of the sovereign state model. It is undeniable that globalization has transformed the nature of the state and that there is a growing trend of cooperation and interdependence. Nonetheless, the sovereign state model still has an important role to play even in the face of globalization. The notion of the sovereign state began with the signings of the treaties of Westphalia. The Westphalian state system is what now is considered the modern political structure. The Sovereign state system has…

    • 1679 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    Winston Churchill's quote, "The best things carried to excess are wrong" is a statement that most people do not take serious. The statement has reoccurred throughout history many times. Three Sovereigns for Sarah documented the events that took place in Salem, Massachusetts in 1692. During that time the Puritans were trying to purify their town of witches. However they carried this to excess by accusing innocent people, pointless tests, and mistreatment towards convicted peoples. The so called…

    • 256 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Sovereign Debt Crisis

    • 16441 Words
    • 66 Pages

    Sovereign Debt in Advanced Economies: Overview and Issues for Congress Rebecca M. Nelson Analyst in International Trade and Finance February 29, 2012 Congressional Research Service 7-5700 www.crs.gov R41838 CRS Report for Congress Prepared for Members and Committees of Congress Sovereign Debt in Advanced Economies: Overview and Issues for Congress Summary Sovereign debt, also called public debt or government debt, refers to debt incurred by governments. Since the global financial…

    • 16441 Words
    • 66 Pages
    Good Essays
  • Better Essays

    Wealth

    • 1165 Words
    • 5 Pages

    name Date assignment is due Title Desire of wealth in ‘The Necklace’ by Guy De Maupassant and ‘Neighbors’ by Raymond Carver Desire of wealth can be considered as the principal cause of the chaos in the world. Desire for wealth makes our society a real pandemonium. Desire for wealth triggers innumerable problems in the life of human beings. Absence of desire for wealth would have made this world a real paradise. Desire for wealth made human beings devalue relationships, health, morality…

    • 1165 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    for action or inaction. Second, that rules of recognition, not a sovereign, are the foundations of a legal system. Advanced mainly by John Austin, the legitimacy Command Theory has become archaic with time as more comprehensive observations about systems of law are made. First, Command Theory states that the sovereign is the sole source of law, dealing out punishments to people who do not obey the sovereign. Second, the sovereign is above the law, meaning it can act however it wishes without regard…

    • 2165 Words
    • 6 Pages
    Powerful Essays