Abstract
Sovereign Wealth Funds (SWFs) have attracted increasing attention during the last few years, mainly due to their intervention in the rescue of the American and European financial systems. This intervention came at a time when the other financial systems were in a financial and economic turmoil. The SWFs injected funds in many banks like Citigroup, Morgan Stanley and UBS. They now manage an estimated $3.9 trillion invested in equity, bonds and hedge funds, and this amount is estimated to double by 2015. Despite a broad variety of definitions, the International Monetary Fund defines the Sovereign Wealth Fund as a government investment vehicle funded by the accumulation of foreign exchange assets, and managed separately from the official reserves of the monetary authorities. Though the SWFs, as active investors, have provided economy with undeniable benefits like supplying the market with necessary liquidity, there is a mystery shrouding them. This availability of very little information regarding their structure, objectives and investment strategies creates a lot of apprehension. This has led to the creation of favorable conditions for the emergence of protectionist laws in the OECD countries.
