Hedge Fund Investing: A Practical Approach to Understanding Investor Motivation, Manager Profits, and Fund Performance
by Kevin R. Mirabile
Sovereign Wealth Funds
Sovereign wealth funds and national pension schemes are pools of capital established by governments to support their people or to meet the pension obligations of government employees. Many countries outside the United States have national pension schemes or have contributed significant amounts of money to sovereign wealth funds whose mandate is to invest globally and generate returns for distribution to the people of that country or for other public goods. These sorts of funds, such as those established in Korea or in the Middle East, are long-term investors of increasing sophistication who, like pension plans, are increasingly allocating assets to alternatives and hedge funds to generate higher returns and lower volatility. Figure 2.7 shows the current and planned allocation to alternative investments by the National Pension Fund of Korea.
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