Sovereign wealth funds: stabilization, investment strategies and lessons for oil-rich Arab economies

In view of their dependence on the intrinsically temporary and highly volatile hydrocarbon sector of the economy, many oil-rich Arab countries realized the importance of sovereign stabilization and long-term investment institutions early on. The Arab SWFs display notable differences in their structural features, investment strategies and risk appetites, making their study important from both regional and global perspectives. This research contributes to the growing but still nascent literature and policies on SWFs by addressing some key positive and normative dimensions of the issues arising from the new challenges and opportunities facing sovereign investors, especially SWFs. Three broad clusters of issues are addressed: (i) SWF organization and investment practice and results, and SWF links to fiscal policies and structural features of their home countries, (ii) the macroeconomics of SWFs and their relation to fiscal policies; and (iii) SWF investment policies and practices including the portfolio composition of a SWF.