The Operation Of Sovereign Wealth Funds

In recent years,sovereign wealth funds (SWFs) has made a rapid development,particularly Russia and China have set up their own sovereign wealth funds,which attracts great concerns from the academics and leaders of developed countries. The phenomenon of sovereign wealth funds has become one of the major problems in the world. Sovereign wealth funds are new types of investment institutions which hold large-scale assets and invest in different kinds of market sectors,making them become an important force in the international capital markets in recent years. As the transparency of sovereign wealth funds is generally poor,coupled with its government background,more and more western countries are wary of such funds,individual scholars and government officials have also thrown the threat of sovereign wealth funds,yet there is considerable concern of sovereign wealth funds by the community. In order to unveil the mystery of sovereign wealth funds,this paper try to make a comprehensive research by using the knowledge of economics,management science and political economics. First,the paper analyzes SWFs'adverse effects on the host country which raises the threat of sovereign wealth funds, and subsequently points out the the threat of sovereign wealth funds is a product of the contest between mercantilism and liberalism from the perspective of political economics. After that the paper studies the major aspects of the operations of sovereign wealth funds from the perspective of international comparison,including the corporate governance,investment management and risk management, which reveals the whole picture of the operation. Finally,summarizes the successful international experience and brings forward some related policy recommendations for China's sovereign wealth fund.