With the huge amount of capital that Sovereign wealth funds (SWFs) command, their role is becoming increasingly important both in the global financial economy and across a wide variety of industries.

Bloomberg recently reported that, such now is the sway SWFs hold, they are part of a group of investors telling financial managers that before committing to future fundraisers.

Perhaps the most high-profile SWF at present is Saudi Arabia’s Public Investment Fund (PIF), the investments of which are central to the diversification plan. A host of sporting investments in recent years 鈥 including in motor racing’s prestigious Formula 1 series, English soccer’s top-tier Newcastle United and the startup LIV Golf tour 鈥 have . However, despite overseeing assets worth nearly $800bn, per the Sovereign Wealth Fund Institute (SWFI), the PIF is by no means the largest SWF.

That honour sits with the Norway Government Pension Fund Global, which the SWFI says holds total assets of almost $1.5trn. It is followed by the China Investment Corporation with $1.2trn and State Administration of Foreign Exchange (SAFE) Investment Company, the Hong Kong branch of the Chinese sovereign wealth fund, with just over $1trn.

SWFs in the global economy

Of how SWFs function and why they are significant, particularly in emerging markets, Glenn Barklie, head of FDI services at GlobalData, explains: 鈥淭ypically, these SWFs amass a wealth of capital which can be used to diversify a country鈥檚 sectoral focus to (further) protect and grow its economy. Think of Middle East SWFs amassing wealth through oil and gas exports and using the wealth to build their renewable energy markets.

鈥淚n emerging markets, foreign SWFs can provide crucial infrastructure projects to help drive forward an economy and open opportunities that may not be otherwise possible.鈥

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile 鈥 free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Elaborating on this, Chris Demetriou, co-founder of accounting and tax firm Archimedia Accounts, posits that SWFs can be an influential and transformative force, providing important sources of capital, especially since the 2008 financial crisis.

鈥淔rom stabilizing banks during the financial crisis to shaping the future of entire industries, sovereign wealth funds have grown from relative obscurity to emerge as true titans of global finance,鈥 says Demetriou. 鈥淎s the largest investment vehicles in the world, with trillions under management, SWFs such as China’s CIC or Norway’s Oil Fund could soon exert more influence than many nations. Their expanding impacts raise intriguing questions for observers today.鈥

Malcolm Ferrante, who leads the Investment Migration Unit at financial services provider CSB Group, tracking capital flows in the global economy, also cites the stabilizing impact of SWFs on financial markets.

鈥淭he rise of SWFs is really just a reflection of the rising economic strength of the nations they represent,鈥 he explains. 鈥淏y investing strategically, those countries are planning for security and prosperity long term. That makes their perspectives important to consider in shaping policies that will impact global financial systems now and in the future.鈥

Of how businesses are affected, Demetriou says: 鈥淚n the business world, SWF investments are now a regular occurrence rather than a rarity. Whether it is Mubadala in tech companies or GIC in real estate assets, their deep pockets and long-term horizons make them valued partners. However, some economic observers also see potential risks if SWFs come to dominate certain sectors or pursue non-commercial goals.鈥