Sovereign Funds (and Princes)

Sovereign wealth funds are huge investment funds controlled by countries that got mega-rich selling oil, or in some other way. They’re highly secretive, and can have a huge impact on global markets.

Story: Princes With Checkbooks

Think of your typical Disney prince or princess. They’re young, good looking, curious about the world, and adventurous.

But you don’t also think of them going to investment conferences or sitting in on pitch meetings with entrepreneurs (a la Shark Tank). In fact, they sometimes do just that – or hire someone to do it for them.

Many countries control the bulk of their wealth through their governments, and the ‘sovereign wealth funds’ they’ve set up to invest that wealth (sovereign means royalty or ruler).

The biggest of these are the largest investment funds in the world: Norway’s and China’s are over a trillion dollars, Abu Dhabi’s and Kuwait’s and Singapore’s are over 500 billion, and there are many others with hundreds of billions.

Although government bigshots (and princes) may have the final say, these sovereign wealth funds are usually managed by professional investors. They do some direct investing, but also give a lot of money to other investment funds to manage (hedge funds, venture capital, private equity, etc.).

Because they’re often controlled by autocratic governments, sovereign wealth funds don’t usually reveal their investments or results, and tend to be highly secretive. They can sift huge sums of money around the globe stealthily, without anyone really being sure what they’re doing.

So next time that Disney princess smiles a knowing smile in the latest animated film… who knows, maybe she’s just made a gigantic investment?