scholarly journals The Optimal Spending Rate Versus the Expected Real Return of a Sovereign Wealth Fund

2021 ◽  
Author(s):  
Knut K. Aase ◽  
Petter Bjerksund
Keyword(s):  
Sovereign Wealth Fund ◽  
Rate Versus

scholarly journals The Optimal Spending Rate versus the Expected Real Return of a Sovereign Wealth Fund

2021 ◽  
Vol 14 (9) ◽  
pp. 425
Author(s):  
Knut K. Aase ◽  
Petter Bjerksund
Keyword(s):  
Life Cycle ◽  
Financial Markets ◽  
Portfolio Choice ◽  
Rate Of Return ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Expected Return ◽  
Real Rate ◽  
Sovereign Wealth Fund ◽  
Rate Versus

We consider a sovereign wealth fund that invests broadly in the international financial markets. The influx to the fund has stopped. We adopt the life cycle model and demonstrate that the optimal spending rate from the fund is significantly less than the fund’s expected real rate of return. The optimal spending rate ensures that the fund will last “forever”. Spending the expected return will deplete the fund with probability one. Moreover, this strategy is inconsistent with optimal portfolio choice. Our results are contrary to the idea that it is sustainable to spend the expected return of a sovereign wealth fund.

Has the Sovereign Wealth Fund of Azerbaijan (SOFAZ) Been Able to Promote Economic Diversification?

2013 ◽  
Author(s):  
Vahid Yücesoy
Keyword(s):  
Fossil Fuels ◽  
Dutch Disease ◽  
Future Generations ◽  
Direct Control ◽  
Economic Diversification ◽  
Sovereign Wealth Funds ◽  
Sovereign Wealth Fund ◽  
Rentier States ◽  
Oil Revenues ◽  
Rich Countries

Oil-rich countries have oftentimes been confronted with the challenge of diversifying their economies away from oil dependence given the exhaustible nature of these fossil fuels. Investing in sovereign wealth funds has been one of the most ubiquitous ways of preparing for the post-oil period. Investing in sovereign wealth funds rather than directly injecting the oil revenues in the economy not only precludes the outbreak of the Dutch Disease (which is known for giving rise to an exchange rate appreciation, crowding out non-oil industries and keeping the economy reliant on oil), but it also saves for future generations. Yet, in the case of Azerbaijan, the Sovereign Wealth Fund of Azerbaijan (SOFAZ), founded in 1999, has only increased this reliance on oil. Using the rentier states theoretical framework, this paper will argue that the direct control over SOFAZ exercised by the president and the lack of consultation with the NGOs have made corruption easier, making the task of economic diversification more difficult. This has been possible because through corruption the president has often resorted to oil money to buy peace rather than invest it in economic diversification. As a result, since the foundation of SOFAZ, the country is more reliant, not less, on oil.   Full text available at: https://doi.org/10.22215/rera.v8i1.223  

Sovereign wealth fund investment and the return-to-risk performance of target firms

2012 ◽  
Vol 21 (2) ◽  
pp. 315-340 ◽  
Author(s):  
April M. Knill ◽  
Bong Soo Lee ◽  
Nathan Mauck
Keyword(s):  
Sovereign Wealth Fund ◽  
Target Firms ◽  
Fund Investment

China's Sovereign Wealth Fund Investments in overseas energy: The energy security perspective

Energy Policy ◽  
2014 ◽  
Vol 65 ◽  
pp. 654-661 ◽  
Author(s):  
Xiaolei Sun ◽  
Jianping Li ◽  
Yongfeng Wang ◽  
Woodrow W. Clark
Keyword(s):  
Energy Security ◽  
Sovereign Wealth Fund
Sign in / Sign up

Export Citation Format

Share Document