Sovereign wealth funds (SWFs) have invested $25.5 billion worldwide so far this year, a 66 percent increase from last year’s figure of $15.4 billion, according to Thomson Reuters. This dramatic increase reflects the rising influence sovereign funds have on the global financial market, with total SWF assets having doubled from 2001 to $3.3 trillion last year.
Most of the total investments landed in the United States, where the mortgage crisis has had left U.S. banks and financial firms in dire need of capital. SWFs have invested $15.8 billion so far into American companies, a fivefold increase from last year’s figure of $3.45 billion. Russia also netted a fair piece of sovereign fund investment, with a $5.3 billion investment from Dubai World.
Sovereign funds have gained influence in recent years as a result of the global credit crisis. Countries with liquid reserves have funneled their money into large-scale global investments where they are sorely needed. Researchers at International Financial Services London expect that SWF assets will continue to rise, peaking past $10 trillion by 2015.
Many SWF-holding nations have gained prominence due to their significant oil reserves. The world’s largest sovereign fund is the United Arab Emirates-based Abu Dhabi Investment Authority, which commandeers $875 billion in assets.