Sovereign wealth funds: main activity trends

TL;DR

This paper examines the investment strategies of sovereign wealth funds, highlighting a seven-level diversification model that can enhance profitability, with a focus on Norway's and Russia's funds.

Contribution

It introduces a seven-level diversification model for sovereign wealth fund investments, applicable to different national funds to improve their profitability.

Findings

Norway's Fund uses a seven-level diversification model.

The model can be applied to Russia's National Wealth Fund.

Diversification strategies impact fund profitability.

Abstract

Sovereign wealth funds are created in those countries whose budget is highly dependent on market factors, usually world commodity prices. At the same time, these funds are large institutional investors. An analysis of the nature of investments by the State Pension Fund Global of Norway showed that investments of the Fund are based on a seven-level model of diversifying its investments. This model can also be applied to the investments of the National Wealth Fund of Russia to increase its profitability.