Evolving Roles of Sovereign Wealth Managers After the Financial Crisis

The following sections are included:

• Preface
• Acknowledgments
• Contents
• List of Figures
• List of Tables

The following sections are included:

• Are SWFs Potential Causes for Concern?
• Research on SWF Investing
• Implications to Global Imbalances
• Should there be Structural Solutions prior to Launching Rescue Attempts?
  • Restoration of Gold Standard
  • “Printing Money” Ad Infinitum
  • Issuing an Alternative Trading Currency
• Can Sovereign Wealth Funds Save the Global Economy?
  • SWF Performance Objectives
  • Intervening in a Financial Crisis
• Potential Policy Implications
• Summary

The following sections are included:

• Brief History of Sovereign Wealth Management
  • General Landscape
  • Excess Reserve Accumulation
  • “Free” Market Capitalism
  • Rescuer of Last Resort
  • Alpha and Size
  • Non-Investment Considerations
• Factors Impacting Investing Behavior
  • Assets Under Management
  • Investment Objectives and Performance Benchmarks
  • Constraints and Regulations
• Risk and Performance Analysis
  • Return Analysis Example — Norway Government Pension Fund
  • Risk Analysis Example — Temasek Holdings
  • Practical Allocation Between Active and Passive Portfolios
• Summary

The following sections are included:

• Introduction
  • Motivation
  • Recap on the Lee (2006) Approach
  • Roadmap
• Abstract Model of Global Economy
  • Basic Descriptions
  • Country A — Rich in Resources
  • Country B — Rich in Labor
  • Country C — Rich in Intellectual Properties/Innovation
  • Analysis in the Absence of Policy Actions
• Potential Outcomes of Policy Interventions
  • Intervention Policy 1 — Restoration of a Gold Standard
  • Intervention Policy 2 — “Printing Money” Ad Infinitum
  • Intervention Policy 3 — Issuing Alternative Trading Currencies
• Implications to SWF Investing
  • SWF Asset Allocation in Typical Markets
  • SWF Allocation under Market in Distress
  • SWF Participation in Rescue Efforts
• Summary

The following sections are included:

• Evolving Global Financial Landscape
  • Euro Crisis in Slow Motion
  • Impacts on Third-Party Bystanders
• Thinking Ahead
  • Scenario 1 — Default of Major Debt Issuer
  • Scenario 2 — Mass Hoarding of Commodities
  • Scenario 3 — Conflicts in East Asia
• Investment Policy Implications
  • Surplus Countries
  • Deficit Countries
  • New Gold Standard
• Summary

This relatively concise book should have demystified some common misconceptions about sovereign wealth management for its audience:

• Sovereign Wealth Funds are symbols of national strength — Countries create sovereign wealth funds only when they are accumulating massive excess reserves in the form of claims on other countries. Usually, these claims significantly exceed what may be deemed necessary as foreign exchange reserves to maintain the stability of a country's currency. As these claims represent future promises by other countries to repay, they can be both a blessing and a curse. Although British authorities are proud of the fact that there has been no default on British government debts over the last three centuries, ultra long-term debts (such as those with maturity of 50 years) often face rapid depreciation on the values of their principals (in terms of purchasing power) when finally repaid. In 1923, France and Belgium occupied the Ruhr when Germany fell behind on war reparation payments, under the French belief that they had the right to extract the reparations themselves in the form of coal and steel. Historically, claims on real assets have always been seen as more superior than counting on paper promises…

The following sections are included:

• Bibliography
• Index