Sovereign wealth funds are becoming increasingly important players in global finance from "summary" of How Finance Works by Mihir Desai
Sovereign wealth funds have emerged as significant players in the global financial landscape. These funds are established by governments to manage their country's wealth, often derived from commodities like oil and gas. As a result, they have amassed substantial assets and wield considerable influence in the financial markets. One reason for the growing importance of sovereign wealth funds is their sheer size. With trillions of dollars under management, these funds have the capacity to move markets and shape investment trends. Their deep pockets enable them to make large-scale investments across a wide range of asset classes, from stocks and bonds to real estate and private equity. Furthermore, sovereign wealth funds are long-term investors with patient capital. Unlike many other market participants who focus on short-term gains, these funds take a strategic approach to investing, looking beyond quarterly earnings and market fluctuations. This long-term perspective allows them to weather market volatility and capitalize on investment opportunities that others may overlook.- Sovereign wealth funds operate with a degree of independence from political pressures. While they are ultimately accountable to their government sponsors, these funds are often managed by professional investment teams that operate at arm's length from political interference. This autonomy enables them to make investment decisions based on financial considerations rather than political expediency.
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