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Norway Tops SWF List as New Funds Proliferate

Commodity strength spurs the spread of sovereign wealth funds as a growing number of countries seek to preserve income for future generations.

  • Tom Buerkle
  • Loch Adamson

Norway’s Government Pension Fund Global is the world’s largest sovereign wealth fund after posting strong growth of 10.4 percent in the latest year, according to Institutional Investor’s 2012 ranking of the world’s biggest sovereign funds.

The Norwegian fund had $612 billion in assets under management at the end of March, compared with $554.5 billion a year earlier, when it ranked second. The Abu Dhabi Investment Authority moves down one place to the No. 2 spot, after a change in II’s research methodology produced a lower estimate of the fund’s assets: $365 billion, compared with $600 billion a year earlier. Unlike Norway, which is completely open about its assets and returns, ADIA does not disclose its size or performance.

While big funds like Norway’s and Abu Dhabi’s have been around for decades and amassed tremendous wealth, one of the most significant recent trends is the proliferation of new sovereign funds. From Israel to Tanzania, an unprecedented number of governments are creating SWFs in an effort to insulate their countries from macroeconomic instability and preserve natural-resource-based wealth for future generations.

“We could see the emergence of as many as 20 new sovereign wealth funds in the next five years,” says Sven Behrendt, founder and head of Geneva-based GeoEconomica, a political-risk management and consulting firm that has undertaken a study of emerging sovereign wealth funds exclusively for Institutional Investor.