Sovereign Wealth Funds and Long-Term Investing

Sovereign Wealth Funds and Long-Term Investing

Edited by: Patrick Bolton, Frederic Samama and Joseph E. Stiglitz

Columbia University Press | 2011

https://doi.org/10.7312/bolt15862

Overview
Contents

About this book

Sovereign wealth funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors.

Edited by a Nobel laureate, a respected academic at the Columbia Business School, and a longtime international banker and asset manager, this volume examines the specificities of SWFs in greater detail and discusses the implications of their growing presence for the world economy. Based on essays delivered in 2011 at a major conference on SWFs held at Columbia University, this volume discusses the objectives and performance of SWFs, as well as their benchmarks and governance. What are the opportunities for SWFs as long-term investments? How do they fulfill their socially responsible mission? And what role can SWFs play in fostering sustainable development and greater global financial stability? These are some of the crucial questions addressed in this one-of-a-kind volume.

Author information

Patrick Bolton is the Barbara and David Zalaznick Professor of Business at Columbia Business School and a member of the Committee on Global Thought. He is also codirector of the Center for Contracts and Economic Organization at the Columbia Law School. His areas of interest are corporate finance, banking, sovereign debt, political economy, and law and economics. He wrote Contract Theory with Mathias Dewatripont and coedited Credit Markets for the Poor with Howard Rosenthal.

Frederic Samama is founder and head of the steering committee of the SWF Research Initiative at Paris Dauphine University. Formerly, he oversaw Corporate Equity Derivatives within Credit Agricole CIB in New York and Paris. During his tenure there he developed and implemented the first international leveraged employee share purchase program, a technology now used widely among French companies. He has advised the French government on different issues (for instance, employee-investing mechanisms and market regulation) and is well known for hisinnovative work in the area where finance and government policy intersect.

Joseph E. Stiglitz is University Professor and member and former chair of the Committee on Global Thought at Columbia University and winner of the Nobel Prize in economics. He served on the Council of Economic Advisers during the Clinton administration and has been chief economist and senior vice president of the World Bank. He is the founder of the Journal of Economic Perspectives, and his best-selling book Globalization and Its Discontents has been translated into twenty-eight languages. He is also the coauthor, with Bruce Greenwald, of Towards a New Paradigm in Monetary Economics and the coauthor, with Carl E. Walsh, of the fourth edition of the influential textbook Economics.

Reviews

Nicholas Stern, London School of Economics and former chief economist of the World Bank:
SWFs now have major opportunities that are too good to miss – investing for the long term and investing in low-carbon technology. This book provides a road map for actions which can accelerate sustainable investment whilst helping the world manage the macroeconomic crises facing this decade and managing potential future crises of climate change.

Robert Tessier, Chairman of the Board of Caisse de dépôt et placement du Québec:
This book is an excellent and in-depth exploration of how to look at the wealth of future generations with respect to the critical issues of our time. Clearly long term investors and sovereign funds have a prominent place in our shared global values to preserve the planet and to build a more sustainable future.

Erik Berglof, chief economist and special adviser to the president at the European Bank for Reconstruction and Development:
This book is an excellent in-depth exploration of how the wealth of future generations can be put to use in addressing the critical issues of our time. Having gone from foe to friend in the global financial crisis, sovereign wealth funds now clearly have an important role to play in improving governance, preserving the planet, sustaining global financial stability, and ensuring long-term growth.

Frontmatter Free access PDF PDF	i
Contents Free access PDF PDF	v
Acknowledgments Access restricted Content is available PDF PDF	xi
Sovereign Wealth Funds – Distinguishing Aspects and Opportunities Joseph E. Stiglitz Access restricted Content is available PDF PDF	26
The Contribution of Institutional Investors to Fostering Stability and Long-Term Growth Augustin de Romanet Access restricted Content is available PDF PDF	32
Sovereign Wealth Funds as Stabilizers Andrés Velasco Access restricted Content is available PDF PDF	34
Financing Long-Term Investments After the Crisis: A View from Europe Franco Bassanini Access restricted Content is available PDF PDF	37
What Sovereign Wealth Funds Can Do to Alleviate Global Poverty James Wolfensohn Access restricted Content is available PDF PDF	44
The Sovereign Debt Problem George Soros Access restricted Content is available PDF PDF	46
Overview Access restricted Content is available PDF PDF	53
The Rationale for Sovereign Wealth Funds from a Development Perspective Stephany Griffith-Jones and José Antonio Ocampo Access restricted Content is available PDF PDF	60
Sovereign Wealth Funds: Form and Function in the Twenty-first Century Gordon L. Clark and Ashby H. B. Monk Access restricted Content is available PDF PDF	67
Introduction Pierre-André Chiappori Access restricted Content is available PDF PDF	76
Stabilization Funds Eric Parrado Access restricted Content is available PDF PDF	78
Tilt of Benchmarks Bob Litterman Access restricted Content is available PDF PDF	80
Four Benchmarks of Sovereign Wealth Funds Andrew Ang Access restricted Content is available PDF PDF	83
Which Financial Benchmarks and Other Incentives Work for Long-Term Investing? Shari Spiegel Access restricted Content is available PDF PDF	86
Further Considerations Access restricted Content is available PDF PDF	92
Panel Summary Access restricted Content is available PDF PDF	93
Panel Paper: The Four Benchmarks of Sovereign Wealth Funds Andrew Ang Access restricted Content is available PDF PDF	94
Introduction Stephany Griffith-Jones Access restricted Content is available PDF PDF	106
Sovereign Wealth Funds as Catalysts of Socially Responsible Investing Augustin Landier Access restricted Content is available PDF PDF	111
Objectives and Ethical Guidelines of Norges Bank Investment Management Dag Dyrdal Access restricted Content is available PDF PDF	114
Building Emerging Countries’ Financial Infrastructure by Investing in Microfinance Arnaud Ventura Access restricted Content is available PDF PDF	116
Further Considerations Access restricted Content is available PDF PDF	118
Panel Summary Access restricted Content is available PDF PDF	120
Introduction Patrick Bolton Access restricted Content is available PDF PDF	122
How to Reward Long-Term Investors Frederic Samama Access restricted Content is available PDF PDF	125
Sovereign Wealth Funds and the Shifting Wealth of Nations Javier Santiso Access restricted Content is available PDF PDF	127
Compensation and Risk-Taking in the U.S. Financial Industry José Scheinkman Access restricted Content is available PDF PDF	131
Building Long-Term Strategies for Investment of Sovereign Wealth Martin Skancke Access restricted Content is available PDF PDF	135
Further Considerations Access restricted Content is available PDF PDF	137
Panel Summary Access restricted Content is available PDF PDF	139
Panel Paper: Capital Access Bonds – Securities Implementing Countercyclical Investment Strategies Patrick Bolton and Frederic Samama Access restricted Content is available PDF PDF	139
Panel Paper: L-Shares – Rewarding Long-Term Investors Patrick Bolton and Frederic Samama Access restricted Content is available PDF PDF	147
Introduction Peter Goldmark Access restricted Content is available PDF PDF	161
Influencing Clean Innovations Philippe Aghion Access restricted Content is available PDF PDF	164
The Emerging Role of State Investors in the Governance of Global Corporations Paul Dickinson Access restricted Content is available PDF PDF	165
The Rise of Carbon-Free Technology Roger Guesnerie Access restricted Content is available PDF PDF	166
Smart Energy Globalization David Jhirad Access restricted Content is available PDF PDF	169
Further Considerations Access restricted Content is available PDF PDF	170
Panel Summary Access restricted Content is available PDF PDF	172
Introduction Joseph E. Stiglitz Access restricted Content is available PDF PDF	173
Macroeconomic Uncertainty and Managing Risk for Sovereign Wealth Funds Oliver Fratzscher Access restricted Content is available PDF PDF	176
Funds and Volatility Andrés Velasco Access restricted Content is available PDF PDF	178
Managing Uncertainty Rob Johnson Access restricted Content is available PDF PDF	179
Key Issues Min Zhu Access restricted Content is available PDF PDF	182
Further Considerations Access restricted Content is available PDF PDF	183
Panel Summary Access restricted Content is available PDF PDF	185
Introduction Geoffrey Heal Access restricted Content is available PDF PDF	186
Managing Commodity Price Volatility Marie Brière Access restricted Content is available PDF PDF	188
Chile and Copper Ignacio Briones Access restricted Content is available PDF PDF	191
Management of Commodity Price Risks on Sovereign Balance Sheets Jukka Pihlman Access restricted Content is available PDF PDF	192
Further Considerations Access restricted Content is available PDF PDF	193
Panel Summary Access restricted Content is available PDF PDF	195
Panel Paper: Managing Commodity Risk – Can Sovereign Funds Help? Marie Brière Access restricted Content is available PDF PDF	196
Introduction Saskia Sassen Access restricted Content is available PDF PDF	204
Reconciling Sovereignty, Accountability, and Transparency in Sovereign Wealth Funds Anna Gelpern Access restricted Content is available PDF PDF	205
Restrictions on Cross-Border Investment Edward Greene Access restricted Content is available PDF PDF	210
The Value of Transparency Adrian Orr Access restricted Content is available PDF PDF	212
Maximizing Autonomy in the Shadow of Great Powers Katharina Pistor Access restricted Content is available PDF PDF	214
Further Considerations Access restricted Content is available PDF PDF	216
Panel Summary Access restricted Content is available PDF PDF	219
Conclusion: Taking Stock – Analytical Challenges and Directions for Future Research Joseph E. Stiglitz Access restricted Content is available PDF PDF	221
Contributors Access restricted Content is available PDF PDF	225
About the Conference Organizers Access restricted Content is available PDF PDF	237
Introduction Patrick Bolton, Frederic Samama and Joseph E. Stiglitz Access restricted Content is available PDF PDF	1

Sovereign Wealth Funds and Long-Term Investing

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