# Sovereign Wealth Fund (SWF): Definition, Examples, and Types

> **Definition**
>
> A sovereign wealth fund (SWF) is a state-owned investment fund that manages a country's surplus reserves to generate economic benefits for its citizens.

## What Is a Sovereign Wealth Fund (SWF)?

A sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country's surplus reserves. SWFs provide a benefit for a country's economy and its citizens.

### Key Takeaways

*   A sovereign wealth fund is a state-owned investment fund.
*   Sovereign wealth funds can be derived from a variety of sources and used for a variety of purposes.
*   Acceptable investments in each SWF vary from fund to fund and country to country.

![Sovereign Wealth Fund (SWF): A state-owned investment fund used to benefit the country's economy and citizens.](https://www.investopedia.com/thmb/hdqtKCMgaHp8Otwld_tYoj4PbXo=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/sovereign_wealth_fund.asp-final-f59aacb89e324c7a9133d36abb90d865.png)

*— Investopedia / Julie Bang*

## Understanding Sovereign Wealth Funds (SWFs)

The funding for a sovereign wealth fund can come from a variety of sources. Popular sources are surplus reserves from state-owned natural resource revenues, trade surpluses, [bank reserves](https://www.investopedia.com/terms/b/bank-reserve.asp) that may accumulate from budgeting excesses, foreign currency operations, money from privatizations, and governmental transfer payments.

In general, sovereign wealth funds usually have a targeted purpose. Some countries have sovereign wealth funds that can be similar to venture capital for the private sector.

Similar to any type of investment fund, SWFs have their own objectives, terms, risk tolerances, liability matches, and liquidity concerns. Some funds may prefer returns over liquidity and vice versa. Depending on the assets and objectives, sovereign wealth funds’ risk management can range from very conservative to a high tolerance for risk.

## Types of SWFs

Traditional classifications of sovereign wealth funds include:

*   Stabilization funds
*   Savings or future generation funds
*   Public benefit pension reserve funds
*   Reserve investment funds
*   Strategic Development Sovereign Wealth Funds (SDSWF)
*   [Funds targeting specific industries](https://www.investopedia.com/terms/i/international-petroleum-investment-company.asp) (possibly emerging or distressed)
*   Foreign currency reserve assets. (Some classifications may not consider these funds as SWFs.) Foreign currency reserve funds are powerful funds that may be used for specific governmental purposes and/or for helping to manage the trading power of a currency globally.

## Investment Terms

The amount of money in a SWF is usually substantial. The acceptable investments included in each SWF vary from fund to fund and country to country. Countries can create or dissolve SWFs to match the needs of their population. Funds with liquidity concerns may limit investments to only very liquid public [debt instruments](https://www.investopedia.com/terms/d/debtinstrument.asp). In some cases, sovereign wealth funds will invest directly in domestic industries. Liquidity, debt, and allocation balances can be some of the key factors in investment terms.

There can be a concern that SWFs have a political influence. Some of the most [significant sovereign wealth funds](https://www.investopedia.com/terms/g/government-of-singapore-investment-corporation.asp) are not entirely transparent about their investments and corporate governance practices.

## Examples of SWFs

The top five largest SWFs by assets as of January 2025 included:  

1.  Norway Government Pension Fund Global: Over $1.7 trillion
2.  China Investment Corporation: Over $1.3 trillion
3.  SAFE Investment Company: Over $1 trillion
4.  Abu Dhabi Investment Authority: Over $1 trillion
5.  Kuwait Investment Authority: Over $1 trillion
6.  Public Investment Fund of Saudi Arabia: $925 billion   
7.  GIC Private Limited: Over $800 billion
8.  Badan Pengelola Investasti Daya Anagata Nusantara: $600 billion
9.  Qatar Investment Authority: Over $525 billion
10.  Hong Kong Monetary Authority Investment Portfolio: Over $510 billion

### Over $13 trillion

The total assets of sovereign wealth funds, as of January 2025.

### Norway Government Pension Fund Global

[Norway’s Government Pension Fund Global](https://www.investopedia.com/news/5-largest-sovereign-wealth-funds/) is the largest in the world. It was established in 1990 as the Government Petroleum Fund, with the initial purpose of creating a fund to hold surplus revenues from the country’s oil trade. In 2006 it changed its name to the Norway Government Pension Fund Global.

The Norway fund invests in equities, fixed income, and real estate. For 2023, it reported a return of 16.1%. That year the fund's holdings were 70.9% in equities, 1.9% in real estate, 27.1% in fixed income, and 0.1% in unlisted renewable energy infrastructure.

### China Investment Corporation

The [China Investment Corporation](https://www.investopedia.com/terms/c/china-inv-corp.asp) is a $1.33 trillion SWF. This fund is used for managing a portion of the country’s foreign currency reserves. The Chinese Ministry of Finance established the China Investment Corporation in 2007 by issuing special bonds.

### Public Pensions

The U.S. Social Security Trust Funds and the [Government Pension Investment Fund Japan](https://www.investopedia.com/terms/g/government-pension-investment-fund-gpif.asp) are the two largest government public pension funds in the world. The SWF Institute doesn’t include these in the pure SWF rankings.

The U.S. Social Security Trust Funds has $2.8 trillion in total assets. The Government Pension Investment Fund Japan has $1.8 trillion in assets. These funds focus on helping a growing elderly population from funding through the current labor force.

The U.S. Social Security Trust Funds invest in special issue securities from the U.S. Treasury. The Japan GPIF is more diversified with allocations to domestic bonds, foreign bonds, domestic equities, and foreign equities.

## Does the United States Have a Sovereign Wealth Fund?

Although the federal government does not have a specific sovereign wealth fund, several of its states do. The largest is the [Alaska Permanent Fund Corporation](https://www.investopedia.com/terms/a/alaska-permanent-fund.asp), a $79.6-billion-dollar state owned investment fund (as of December 31, 2024) that pays an annual dividend to eligible residents of Alaska.

## Which Country Has the Largest Sovereign Wealth Fund?

The largest sovereign wealth fund is the Norway Government Pension Fund Global, which invests surplus oil revenues in international assets to ensure that the country will remain prosperous after the oil runs out. It holds over $1.7 trillion in total assets, and is invested in about 1.5% of all listed shares. Earnings from the fund provide about 20% of the Norwegian government's annual revenues.

## What Does a Sovereign Wealth Fund Invest in?

Sovereign wealth funds invest in the same types of assets as other funds, including equities, debt securities, real estate, resource extraction, and other assets. Although the primary goal is to provide investment returns, SWFs may also seek investments that benefit the economy of the host country, such as in infrastructure or domestic companies.

## The Bottom Line

A sovereign wealth fund is a pool of assets that is run by a country's government, invested in assets to generate [economic benefits for the citizens](https://www.investopedia.com/get-paid-for-living-in-alaska-11745087). For oil-rich countries like Norway, Kuwait, and Saudi Arabia, sovereign wealth funds represent an important source of government revenues and a tool for economic policy.

> **Article Sources**
>
> 1.  Sovereign Wealth Fund Institute. "[Top 100 Largest Sovereign Wealth Fund Rankings by Total Assets](https://www.swfinstitute.org/fund-rankings/sovereign-wealth-fund)."
>     
> 2.  SWF. "[Sovereign Wealth Funds (SWFs) Globally Manage](https://globalswf.com/)."
>     
> 3.  Norges Bank Investment Management. "[History](https://www.nbim.no/en/the-fund/the-history/)."
>     
> 4.  Norges Bank Investment Management. "[2023 Government Pension Fund Global Annual Report](https://www.nbim.no/contentassets/75e18afc40974cb189e3747164def669/gpfg-annual-report_2023.pdf)." Pages 3-4.
>     
> 5.  Sovereign Wealth Fund Institute. "[China Investment Corporation](https://www.swfinstitute.org/profile/598cdaa50124e9fd2d05ac89)."
>     
> 6.  International Forum of Sovereign Wealth Funds. "[China Investment Corporation](https://www.ifswf.org/member-profiles/china-investment-corporation)."
>     
> 7.  Sovereign Wealth Fund Institute. "[Top 100 Largest Public Pension Rankings by Total Assets](https://www.swfinstitute.org/fund-rankings/public-pension)."
>     
> 8.  Social Security Administration. "[Trust Fund FAQs](https://www.ssa.gov/oact/progdata/fundFAQ.html)." Click "How Are the Trust Funds Invested?"
>     
> 9.  Government Pension Investment Fund. "[Investment Results for 1Q of Fiscal 2023](https://www.gpif.go.jp/en/performance/28637954gpif/2023_1Q_0804_en.pdf)." Page 3.
>     
> 10.  Alaska Permanent Fund Corporation. "[Investing for Alaska Investing for the Long Run](https://apfc.org/)."
>      
> 11.  Norges Bank Investment Management. "[About the Fund](https://www.nbim.no/en/the-fund/about-the-fund)."