The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds

Forthcoming, Annual Review of Financial Economics

37 Pages Posted: 29 Oct 2020 Last revised: 4 Feb 2021

See all articles by William L. Megginson

William L. Megginson

University of Oklahoma

Diego López

Global SWF

Asif I. Malik

University of Oklahoma - Michael F. Price College of Business

Date Written: January 26, 2021

Abstract

State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and most important private equity investors and are key investors in other alternative asset investments such as real estate, infrastructure and hedge funds. SOIs are also leaders in promoting environmental, social and governance (ESG) and corporate social responsibility in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds (SWFs), public pension funds (PPFs), and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience (GSR) Scoreboard for SOIs and survey research examining their role in promoting good corporate governance.

Keywords: Sovereign wealth funds, Public pension funds, Government policy and regulation

JEL Classification: G32, G15, G38

Suggested Citation

Megginson, William L. and López, Diego and Malik, Asif I., The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds (January 26, 2021). Forthcoming, Annual Review of Financial Economics, Available at SSRN: https://ssrn.com/abstract=3712690 or http://dx.doi.org/10.2139/ssrn.3712690

William L. Megginson (Contact Author)

University of Oklahoma ( email )

307 W Brooks, 205A Adams Hall
Norman, OK 73019
United States
(405) 325-2058 (Phone)
(405) 325-1957 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/M/William.L.Megginson-

Diego López

Global SWF ( email )

49 East 34th Street
New York, NY 10016
United States
9293011895 (Phone)

Asif I. Malik

University of Oklahoma - Michael F. Price College of Business ( email )

307 W Brooks
Norman, OK 73019
United States
4056945869 (Phone)

HOME PAGE: http://https://www.ou.edu/price/finance/faculty/currentstudents

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