States, Markets, And Sovereign Wealth Funds‪.‬

********** The rapid growth of sovereign wealth funds in the last few years has suddenly become an important topic in international policymaking circles. While these funds have a longer history, they have recently been growing very quickly. Of the forty plus funds in existence, twelve have been created since 2005 and a number of other countries are considering following suit (Kimmitt 2008). As they increase in size, such state-led funds are emerging as significant financial players in global financial markets. Their value is estimated to be somewhere around $2.5 trillion (up from around $500 billion in 1990), greater than the entire hedge fund industry. According to Stephen Jen (2007), the value of these funds could rise to roughly $12 trillion by 2015, and will surpass the total value of official reserves by 2011. These funds are also becoming more aggressive, shifting their investments from government securities into less liquid, higher risk assets.