The Savvy Investor SWFs and Central Banks section offers academic research materials, thought-leadership pieces, and white papers covering the long-term investment management in natural resource reserves, commodity supply and demand dynamics (oil and gas), OPEC, as well as central bank policy relating to monetary policy and foreign economic controls.
Sovereign wealth funds (SWFs), usually state-owned investment funds, tend to be receive an abundance of natural resource asset flows, and are typically endowed by governments of emerging market countries and countries with little debt. Due to the sizable assets under management, and emerging market economies not having developed a ‘consuming’ need for these resources, resources are instead sold to other countries. This provides a substantial trade surplus, with excess cash generated being reinvested...
SWFs, and other types of sovereign-asset liability management institutions, manage to make significant long-term arrangements for their asset management, in an effort to have a more transparent and accountable capital growth measure, therefore reducing the need to be an ‘active’ manager when market conditions become less favourable.
Central banking institutions play a critical role by helping to maintain well-functioning and liquid capital markets. Typically, this is done via traditional open-market operations such as raising and lowering short-term interest rates and controlling the country’s money supply.
However, as a last-ditch effort to resolve financial crises, central banks have more recently relied heavily on unconventional monetary policy actions such as quantitative easing.
Quantitative easing involves purchasing assets (such as government bonds, mortgage-backed securities, and corporate bonds), thereby increasing the government’s balance sheet, and garnering further influence over the yield curve in order to support the economy. While monetary policy actions are frequently written about in the context of fixed income and economic outlook white papers, the articles and white papers in this section focus on the evergreen aspects of the management of central banking institutions.
SWFs and Central Banks pertain to:
- Long-term investing
- Natural resource reserves (oil and gas, commodity supply), OPEC
- NGPFG, CIC, Temasek, ADIA, KIA, SAMA, QIA