Abstract
Research background: The ever-increasing degree of globalization is reflected, among other things, in the establishment of relatively new institutional investors - sovereign wealth funds. Until the financial crisis in 2008, these funds were considered by many developed countries to be a potential threat to national security. However, this changed when they invested large sums in bankrupt companies and banks during the crisis. However, fears of their influence remain. Purpose of the article: The paper aims to assess the importance and perspectives of sovereign wealth funds in the world economy. In this paper, we start with the definition of sovereign wealth funds and distinguish them from other state asset managers. We also focus on assessing their importance within the global investor portfolio and their impact on global economic development. Methods: We used an analysis of available financial and economic data related to their activities and comparison with selected asset managers. Findings & Value added: We discuss their specific investment strategies and their transparency, which affect their credibility. Within the evaluation, the positive benefits outweigh the risks of sovereign wealth funds. However, we should always assess in the context of a specific sovereign wealth fund. The importance of sovereign wealth funds and their impact will continue to grow, even though their relative share of the global financial market is not very high. Thanks to their long-term investments, they contribute to greater stability of the financial markets of the given countries.
Highlights
Sovereign wealth funds (SWFs) are a relatively new financial institution in comparison to traditional financial institutions, such as banks, insurance companies, monetary and mutual funds, and other similar institutions
Sovereign wealth funds operate on financial markets in the same way as classical investment companies, i.e., they invest in stocks, real estate, bonds, commodities, or other financial instruments
Global foreign exchange reserves grew by 55% during this period, with sovereign wealth fund (SWF) assets growing by 150%
Summary
Sovereign wealth funds (SWFs) are a relatively new financial institution in comparison to traditional financial institutions, such as banks, insurance companies, monetary and mutual funds, and other similar institutions. Up until the financial crisis in 2008, many developed countries considered sovereign wealth funds to be potential threats to national security This changed when they invested a significant amount into failing companies and banks during the crisis. Over the past two decades, a commodity price boom, a global imbalance between savings and investment in large countries, and massive accumulation of foreign reserve assets has led to sovereign wealth funds becoming significant players on the international financial markets. A number of definitions have been put forth; we have presented the most well-known of these Regarding the above, it is the goal of this paper to assess the importance and perspectives of sovereign wealth funds in the world economy
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