what is a sovereign wealth fund swf 
a sovereign wealth fund is a state owned investment fund comprised of money generated by the government often derived from a country s surplus reserves swfs provide a benefit for a country s economy and its citizens understanding sovereign wealth funds swfs the funding for a sovereign wealth fund can come from a variety of sources popular sources are surplus reserves from state owned natural resource revenues trade surpluses bank reserves that may accumulate from budgeting excesses foreign currency operations money from privatizations and governmental transfer payments in general sovereign wealth funds usually have a targeted purpose some countries have sovereign wealth funds that can be similar to venture capital for the private sector similar to any type of investment fund swfs have their own objectives terms risk tolerances liability matches and liquidity concerns some funds may prefer returns over liquidity and vice versa depending on the assets and objectives sovereign wealth funds risk management can range from very conservative to a high tolerance for risk types of swfstraditional classifications of sovereign wealth funds include investment termsthe amount of money in a swf is usually substantial the acceptable investments included in each swf vary from fund to fund and country to country countries can create or dissolve swfs to match the needs of their population funds with liquidity concerns may limit investments to only very liquid public debt instruments in some cases sovereign wealth funds will invest directly in domestic industries liquidity debt and allocation balances can be some of the key factors in investment terms there can be a concern that swfs have a political influence some of the most significant sovereign wealth funds are not entirely transparent about their investments and corporate governance practices examples of swfsthe top five largest swfs by assets as of june 2024 included the total assets of the top 100 sovereign wealth funds as of 2024 1norway s government pension fund global is the largest in the world it was established in 1990 as the government petroleum fund with the initial purpose of creating a fund to hold surplus revenues from the country s oil trade in 2006 it changed its name to the norway government pension fund global 2the norway fund invests in equities fixed income and real estate in 2024 it reported a return of 16 1 over the previous year in 2023 70 9 of the fund was in equity 1 9 in real estate 27 in fixed income and 0 1 in unlisted renewable energy infrastructure 3the china investment corporation is a 1 35 trillion swf this fund is used for managing a portion of the country s foreign currency reserves 4 the chinese ministry of finance established the china investment corporation in 2007 by issuing special bonds 5the u s social security trust funds and the government pension investment fund japan are the two largest government public pension funds in the world the swf institute doesn t include these in the pure swf rankings the u s social security trust funds has 2 8 trillion in total assets the government pension investment fund for japan has 1 6 trillion in assets 6 these funds focus on helping a growing elderly population from funding through the current labor force the u s social security trust funds invest in special issue securities 7 the japan gpif is more diversified with allocations to domestic bonds foreign bonds domestic equities and foreign equities 8