Sovereign Wealth Funds (SWFs) have been making inroads to foreign assets such as US banks and real estate for some time now. Flush with cash owing to an export boom and oil bonanza, governments of export oriented Asian countries and oil rich nations set up these SWFs as investment vehicles to manage the country’s foreign exchange reserves. Some SWFs, particularly those of oil producing companies, were set up to act as stabilisers to insulate the budget and economy against oil price swings. SWFs came into lime light when they were involved in some high profile investments such as $21 billion bail out money for Citigroup and Merrill Lynch, 90% share in New York’s Chrysler building and $3 billion investment by China Investment Corporation (CIC) in Blackstone, the private equity company. Their growth and the magnitude of investments even prompted some to view SWFs with considerable hostility. Some even called for rules and policies to govern SWF investments.
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