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Strategies For Managing Government Sovereign Wealth Funds During The Covid-19 Pandemic

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  • Mstislav Afanasyev
  • Nataliya Shash

Abstract

This paper examines the transformational shifts in investment strategies of sovereign wealth funds. It analyzes the basic theory of sovereign wealth funds and justifies the need for its development. It identifies the similarities and distinguishing features of sovereign wealth funds. Four types of sovereign wealth funds are characterized, and the key requirements for their management system are clarified. Analysis results for the changing capital among the worlds largest sovereign wealth funds since the start of the Covid-19 pandemic are given. Market value trends of the Government Pension Fund Global (Norway) for 1998-2021 were revealed, and a prediction of its changes for the period until 2026 was created. The influence of the Covid-19 epidemic on the structure of investment portfolios (including the emergence of a new class of assets) was presented, along with GPFGs investment strategy. Changes in the amount of NWFs funds (Russia) for the period 2008-2021 were presented and its growth for 2022-2023 was predicted. The transformation of NWFs liquidity regulatory structure was assessed. New trends in the investment activities of sovereign wealth funds, which occurred under the influence of the Covid-19 epidemic, were revealed. These include reduced risk appetite, increased investment activity, and a higher share of direct investments in asset portfolios. Individual sovereign wealth funds were used to compile a chart of their investment portfolios, which were diversified depending on investment goals and risk level. Recommendations for building the investment strategy of sovereign wealth funds were formulated, with a proposed algorithm for its formulation, including three consecutive stages. It is noted that the results of implementing the investment strategy of sovereign wealth funds directly depends on management quality, whose efficiency can be assessed using special indicators.

Suggested Citation

  • Mstislav Afanasyev & Nataliya Shash, 2021. "Strategies For Managing Government Sovereign Wealth Funds During The Covid-19 Pandemic," Public administration issues, Higher School of Economics, issue 6, pages 49-62.
    • Handle: RePEc:nos:vgmu00:2021:i:6:p:49-62
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    References listed on IDEAS

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    1. Mauro Megliani, 2015. "Sovereign Wealth Funds and Investment Law," Palgrave Macmillan Books, in: Nigel Finch (ed.), Emerging Markets and Sovereign Risk, chapter 9, pages 167-181, Palgrave Macmillan.
    2. Megginson, William L. & Gao, Xuechen, 2020. "The state of research on sovereign wealth funds," Global Finance Journal, Elsevier, vol. 44(C).
    3. Shai Bernstein & Josh Lerner & Antoinette Schoar, 2013. "The Investment Strategies of Sovereign Wealth Funds," Journal of Economic Perspectives, American Economic Association, vol. 27(2), pages 219-238, Spring.
    4. Balding, Christopher, 2012. "Sovereign Wealth Funds: The New Intersection of Money and Politics," OUP Catalogue, Oxford University Press, number 9780199842902.
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