Russian Minister Supports Country's New SWF, With Backing From Goldman, Abu Dhabi

(May 15, 2011) — Heads of Goldman Sachs, Abu Dhabi’s sovereign wealth fund, and other funds are visiting Russia later this month to discuss the country’s newly planned investment fund, according to the Dow Jones Newswires.

Stanislav Voskresensky, the country’s deputy minister of economic development, told the news service that the newly created government-backed fund — Russian Direct-Investment Fund — would be targeted at private-equity investors. According to the minister, the country is aiming to attract billions in foreign investment, which would help the government jumpstart the economy.

Last week, a group of sovereign wealth funds, consisting of representatives from Russia, along with China, Australia, and other governments, defended their investment role against opponents who claim that the funds use their investments for political means. Instead, the group of sovereign wealth funds asserted that they promote global stability.

“There is no reason to discriminate against them,” David Murray, chairman of the board of guardians of Australia’s Future Fund, said at a news conference, as reported by Bloomberg.

An April report by Preqin found that sovereign wealth fund assets swelled 11% in the previous 12 months to about $4 trillion, fueled largely by intensified alternative investment programs. With their longer-term investment horizons compared to other investors, the report found that despite the challenging financial climate, sovereign wealth funds have been better able to commit larger proportions of their portfolios to longer-term and alternative investments.

The chairman of China Investment Corporation’s (CIC) board of supervisors, Jin Liqun, said during last week’s conference: “The $4 trillion is invested in relatively fixed areas. It helps stabilize the world economy. It is not like ‘hot money’ that comes in and leaves very quickly and randomly.”