InvestorQ : What exactly are Sovereign Funds and how big are they as investors in Indian equities?
indhumathi Sayani made post

What exactly are Sovereign Funds and how big are they as investors in Indian equities?

Answer
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shrinidhi Rajan answered.
5 months ago


Sovereign funds came about when large oil exporters felt the need to intelligently invest the oil profits to take care of the bad years. As a measure of long term economic security, these nations created sovereign funds to invest the monies earned from oil. This was meant to take care of the state welfare expenses in tough times when oil prices fell. In the Indian context, SWFs account for 6.2% of all FPI flows. This used to be 4.8% some 2 years back. With lower yields globally, most of the sovereign funds are looking at emerging markets like India to help them make up for the gap. Typically, the SWFs look at the passive route via ETFs and that has driven a lot of flows into India in the last few years.