Sovereign wealth funds to alternative investments: It depends on our mandate (mostly)

Feb 24th, 2011 | Filed under: Institutional Investing, Today's Post | By:
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In the world of sovereign wealth funds, several giants stand above the rest.  There’s the Abu Dhabi Investment Authority, the China Investment Corporation, and the Government Pension Fund of Norway.  Although some (CIC, for example, along with Singapore’s GIC and Korea’s KIC) owe their existence to trade surpluses, many were the result of natural resources revenues.  Several of the resource-based funds have been around since the first oil boom in the 1970’s.

But there is one Lilliputian sovereign wealth fund that pre-dates the sovereign wealth funds of Norway, Mexico, Alberta and even the storied Abu Dhabi Investment Authority:  the $400 million Kiribati Revenue Equalization Fund (established in 1956).

If the name “Kiribati” rings a bell it may be because that’s the country often held up as an example of a low-lying nation that is about to be claimed by rising sea levels.  It’s also a former British protectorate that once made a good living off its phosphate deposits.  Alas, those deposits eventually ran dry and after some haggling with the British, the country was set free with a pretty healthy trust fund for its 100,000 citizens (roughly the same amount per citizen as Canada’s gigantic Canadian Pension Plan).

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