Many Americans may not realize it, but there is a massive amount
of money sitting in sovereign wealth funds. To be precise, the
world's sovereign wealth funds hold almost $5.1 trillion,
according to the Sovereign Wealth Fund Institute
Not surprisingly, the primary funding source for these vehicles
comes by way of oil and gas resources. For investors, how a
country's sovereign wealth fund is funded is not as important as
knowing that the fund exists. While it may be difficult to measure
the qualitative impact of sovereign wealth funds, these vehicles
can serve as a backstop for the countries that have them in times
of economic tumult.
Indeed, the best way of looking at a large sovereign wealth fund
may be to compare it a large cash hoard on a company's balance
sheet. The investment community may not have yet priced that cash
into the stock, but it is comforting to know it exists.
Here are some ETFs that track countries with massive sovereign
Global X Norway ETF (NYSE:
) What country has the world's second-largest sovereign wealth fund
after Abu Dhabi?
Saudi Arabia? No. Kuwait? Wrong again? China? Nope. The answer
is Norway. This oil-funded vehicle has about $600 billion in
assets, which is more than the country's GDP, Global X CEO Bruno
del Ama said in an interview with Benzinga.
del Ama pointed out that people do not know how to value
Norway's sovereign treasure chest, but the fund can help mitigate
the impact of lower oil prices and smooth out economic volatility
if need be. There are myriad
reasons to consider investing in Norway
and the sovereign wealth fund is added, unheralded bonus.
iShares MSCI Singapore Index Fund (NYSE:
) Singapore-based Temasek is sovereign fund with almost $160
billion in assets, according to SWFI, but investors cannot overlook
the fact that city-state's government has a fund with nearly $250
billion in assets. As is the case with Norway, investors focus on
other high points with Singapore, including its status as a rising
Asian financial capital and a AAA credit rating.
EWS allocates 47 percent of its weight to financials and, while
Singapore's banks are not in trouble, it is comforting to know the
sovereign wealth fund could be deployed should the banking sector
iShares Chile Investable Market Index Fund (NYSE:
) Chile may not be the first country investors think of when it
comes to sovereign investment vehicles, but the government has $15
billion in a sovereign wealth fund,
according to Bloomberg
That may not sound like much compared to Norway or Singapore,
but the SWFI rankings put Chile's sovereign wealth fund ahead of
Since Chile is the world's largest copper producer, investors
view the country
as a materials play
despite a diverse, vibrant economy. The good news is Chile, like
Norway, can use its sovereign wealth fund to dampen declining
WisdomTree Middle East Dividend Fund (NASDAQ:
) Of the 15 largest sovereign wealth funds in the world, five are
found in countries that GULF offers exposure to. That includes the
almost $630 billion Abu Dhabi Investment Authority, the world's
largest sovereign fund. Kuwait and Qatar also have substantial
sovereign funds. Combined, the United Arab Emirates, Qatar and
Kuwait represent 77 percent of GULF's weight.
If the sovereign wealth fund exposure does not convince one to
look at GULF, perhaps a
30-day SEC yield of 4.78 percent will
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(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
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