The Stroock Sovereign Wealth Forum provided an opportunity for conversation and reflection among global sovereign wealth fund leadership on issues important to a crucial sector of the global savings pool. This inaugural session has come during a period of unusual uncertainty in the global economy and financial markets, and thus an especially good time for further discussion on core questions:
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Role. Has the evolving global economy altered the underlying rationales for which sovereigns
have accumulated wealth funds? Historically, these have included "rainy day" resources to assist in managing short-
to medium-term fiscal pressures, facilitating the public's participation in natural resource extraction and ensuring
the intergenerational sustainability of living standards through accumulation of "future funds".
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Scale. How large should a SWF be relative to the size of population, the fundamentals of the economy and
the role expected of the fund?
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Governance. Who is ultimately responsible for the design, governance, and management of a SWF?
What are the advantages and disadvantages of the different approaches to this "authorizing environment"?
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Spending and investment policy. Do evolving macroeconomic and financial market conditions call for
a rethink of the spending and investment policy frameworks for SWFs, whether established to mitigate
fiscal pressures, generate reliable current income for the public or accumulate resources for the longer term?
Have changing conditions altered long-term return and volatility expectations? If so, what is the appropriate
direction for important spending and investment decisions? Are there considerations that would lead to
different responses for SWFs than for other pools of savings with similar objectives?
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Natural resource dependency. For SWFs heavily dependent on natural resources for funding, what are the
most effective tools available to mitigate the impact of price and production volatility on a SWF?
Longer term, how can sponsors maintain a sustainable SWF in cases in which the corpus is derived from
energy resources affected by carbon constraints?
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Risk tolerance, return expectations and investment practice. What is the current thinking on active
versus passive strategies, outsourcing investment management versus building internal expertise (whether
by asset class, or for the entire portfolio)
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Transparency. What are evolving approaches to public transparency with respect to SWF governance and
oversight, management, revenues, expenditures and investment performance? How can this transparency
best be enhanced without impeding effective management?
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Stakeholder education. Experience among a number of SWFs is that effective education of stakeholders
and the general public concerning the fund's purposes and policies can be important both in its own
right and as a mechanism for ensure that SWF management has public support for effective spending and
investment policies. What is the best way to accomplish this?
We anticipated a robust discussion and an opportunity to find consensus and direction on many of the issues facing SWF leadership, public decision-makers and their constituents, and the financial industry that serves them.
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