Sovereign Wealth Funds: Opportunity or Threat?

Abstract

Sovereign Wealth Funds, which have become one of the most popular financial instrument of recent years and were accepted as both institutional innovation and financial power in international financial markets, have reached a level that can shape the structure of national economies with total assets of 7.445 trillion dollars. The fact that national asset funds have reached a considerable volume today makes it possible for both the host country and the home country to influence the economic conditions at the macroeconomic and microeconomic dimension.The fact that sovereign wealth funds, which have a size that can affect national economies, are in the state property, which is the most striking and controversial feature, places such funds in the target of criticism. However, there are also opinions that sovereign wealth funds act only for economic purposes. This study investigates the driving forces behind the development of sovereign wealth funds, which are examined as international institutional investors, as well as the funding sources and the purposes of such funds. In addition, this study discusses whether national asset funds are a useful tool for economies, and the ideas that are directed at and favored against these funds.