Module 3 paper - Sovereign Wealth Fund for US

Module 3 paper - Sovereign Wealth Fund for US - Shin, Jae...

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Shin, Jae 21472705/Section 102 Module 3: Sovereign Wealth Fund for US Sovereign wealth funds (SWFs) have emerged as an important investor on the global financial system. Broadly defined as state-owned investment funds, the estimated amount of resources controlled by these funds are about $2-3 trillion, and are growing sharply. According to the Deutsche Bank, their size is twice of hedge funds worldwide, and may grow more quickly if oil prices stay high and Asian export trade surpluses continue to rise. Despite this growing and significant role, SWFs, in comparison to hedge and private equity funds, have been receiving little attention, mainly because of their lack of transparency to the public. With the exception of Norway Government Pension Fund, many countries with SWFs not only lack transparency of their investment strategies, but also their accountability and reciprocity in their political and economical processes. Moreover, the real danger of SWFs is that they may target strategic industries, often for political advantages in the long-term, which causes conflict with national security and may give rise to capital account protectionism. Although SWFs carry high risk and potentially cause conflict of interests (depending on
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This note was uploaded on 02/13/2011 for the course UGBA 10 taught by Professor Xuanmingsu during the Spring '08 term at University of California, Berkeley.

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Module 3 paper - Sovereign Wealth Fund for US - Shin, Jae...

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