Administration March 31, 2008

Sovereign Wealth Funds Enjoy 18% Asset Increase

March 31, 2008 (PLANSPONSOR.com) - Rising oil prices and Asian countries' growing trade surpluses helped drive an 18% increase in sovereign wealth funds to $3.3 billion in 2007, a total that is expected to reach $10 trillion by 2015, a new report said.

Reported by

Fred Schneyer

Including other sovereign investments, such as pension reserve funds or funds owned by state-owned corporations and other official foreign exchange reserves, sovereign funds in a broader sense hit $14.7 trillion in 2007, International Financial Services London (IFSL) said in a report, according to Reuters.

Sovereign wealth funds now have assets between $1.9 trillion and $2.9 trillion and this could grow to $15 trillion in the next eight years, according to U.S. Treasury estimates. The International Monetary Fund (IMF) estimates that sovereign wealth funds could reach $6 trillion to $10 trillion by 2013.

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IFSL, a London think tank, said non-commodity sovereign funds doubled their total assets from three years ago to $1.2 trillion last year. They may see their share of global sovereign funds increase to 40% by 2010 and 50% by 2015, up from 36% in 2007, IFSL said.

Since the start of the credit crisis, sovereign funds, mostly from Asia, have invested more than $60 billion in U.S. and Swiss banks, IFSL said, according to Reuters. (See Wall Street Shores Up Finances With Overseas Capital )

As the rising class of state-controlled investment funds in the Middle East and Asia bails out western financial institutions, politicians and business leaders in the United States and Europe have proposed laws to make it harder for these funds to take over flagship companies.