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The top 15 sovereign wealth funds, according to the Sovereign Wealth Fund Institute; 1. Norway (Government Pension Fund Global): $737.2bn
Topic Started: 8 Oct 2013, 12:40 PM (612 Views)
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Turn crown estate into sovereign wealth fund, Labour MPs to urge

Phillip Inman, economics correspondent
The Guardian, Monday 30 September 2013 23.11 AEST

Britain's £8.6bn crown estate should be turned into a sovereign wealth fund to rival government-backed investment funds that have sprung up across Europe, the Middle East and Asia in the last 20 years, a group of Labour MPs will say this week.

The MPs will tell the Co-op party's annual conference on Friday that the crown estate, which comprises vast tracts of land and commercial property across the UK, should be freed up to invest in foreign property and much-needed infrastructure projects in Britain.

Gareth Thomas, chair of the Co-op party's group of 33 Labour MPs, said such a sovereign wealth fund could boost growth and help pay the UK's debts.

Thomas said: "A British sovereign wealth fund could promote co-operation with fast-growing overseas businesses, earning the UK vital income over the long term.

"Modernising the rules governing the crown estate could, for example, allow it to invest in up-and-coming property markets in G20 states like China and India or in new technology businesses, helping Britain secure access to innovative ideas developed abroad."

The estate manages the £8.6bn of land and property that the crown owns, but which the Queen does not control and cannot sell. The estate is accountable to parliament, and pays its surplus income to the Treasury to offset the cost of maintaining the royal family.

The Treasury said there were no plans to develop a UK sovereign wealth fund to rival the £15bn French and £875m Italian government funds, though the local government minister, Eric Pickles, is consulting on whether to create a "superfund" from the UK's assorted state pension schemes, which have amassed almost £200bn in assets.

There are 89 local government pension schemes, with around £150bn under management; several others, including the Royal Mail pension scheme and the fund for MPs' pensions, have built up assets from investments in shares and bonds.

However, pension funds are excluded from the list of sovereign wealth funds, which are expected to generate wealth for the nation as a whole.

Thomas said that, with a change in the law lifting restrictions that limit it to property and land in Britain, the crown estate could become a sovereign wealth fund and develop its investment strategy.

Last year the estate generated a surplus of £253m from its investments after making an 11.9% annual return. The bedrock of the estate is the Prince Regent's London property holdings, built 200 years ago, which run from Regent's Park through Oxford Circus and Regent Street to St James's Park.

Seabeds managed by the estate are leased to offshore windfarms, and land across the UK is home to many other renewable energy schemes, business parks and factories. The fund was boosted last year by the acquisition of the Coliseum shopping park, in Cheshire, and Silverlink shopping park, outside Newcastle.

Lifting restrictions on the estate would, Thomas said, allow it "to begin to explore ventures into overseas property markets, for example in the Asian Pacific region, where eight of the world's largest 20 property markets are located, including China, Hong Kong, Taiwan and India, or taking a stake in companies set up to bring new technologies to market".

Most of the largest funds rely on oil and other commodity revenues to boost their assets under management. Norway already has a £460bn sovereign wealth fund generated from taxes on its oil and gas industry. Saudi Arabia, Kuwait and China have also amassed huge wealth in funds that have become active investors in foreign markets, including the UK.

It is estimated that government-backed funds account for around $30tr (£18.5tr) of global assets, the same as the estimated $30tr of pension funds' assets. Since the beginning of 2008, which marks the high point for most stock and bond markets, funds registered with the Sovereign Wealth Fund Institute have increased their assets by 59%. Much of the gain is from oil and gas revenues, which soared after the eurozone crisis caused a wholesale price rise.

The top 15 sovereign wealth funds, according to the Sovereign Wealth Fund Institute

1. Norway (Government Pension Fund Global): $737.2bn
2. Saudi Arabia (SAMA Foreign Holdings): $675.9bn
3. UAE-Abu Dhabi (Abu Dhabi Investment Authority): $627bn
4. China (China Investment Corp): $575.2 billion
5. China (SAFE Investment Co): $567.9 bn
6. Kuwait (Kuwait Investment Authority): $386bn
7. China-Hong Kong (Hong Kong Monetary Authority Investment Portfolio): $326.7bn
8. Singapore (Government of Singapore Investment Corp): $247.5bn
9. Russia (National Welfare Fund): $175.5bn
10. Singapore (Tamasek Holdings): $173.3bn
11. China (National Social Security Fund): $160.6bn
12. Qatar (Qatar Investment Authority): $115.0bn
13. Australia (Future Fund): $88.7bn
14. Algeria (Revenue Regulation Fund): $77.2bn
15. UAE-Dubai (Investment Corp of Dubai): $70.bn

Read more: http://www.theguardian.com/money/2013/sep/30/crown-estate-sovereign-weath-fund-labour
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And Australia's Future Fund's only purpose is to meet the government's future liabilities for the payment of superannuation to retired civil servants of the Australian Public Service.
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