Vol. 7 No. 4 (2020)
Space and Culture, India

Perspective

Sovereign Wealth Funds: Russian and International Experience

Published 2020-03-29

  • Mikhail Evgenievich Kosov
    • ,
  • Aleksandr Victorovich Sigarev
    • ,
  • Vitaly Filippovich Sharov
    • ,
  • Olga Vladilenovna Makashina
    • ,
  • Vladimir Mikhailovich Smirnov

Mikhail Evgenievich Kosov
Financial University under the Government of the Russian Federation, 49 Leningradsky Avenue, Moscow, 125993, Russia. Plekhanov Russian University of Economics, 36 Stremyanny Lane, Moscow, 117997, Russia

Aleksandr Victorovich Sigarev
Financial University under the Government of the Russian Federation, 49 Leningradsky Avenue, Moscow, 125993, Russia. Plekhanov Russian University of Economics, 36 Stremyanny Lane, Moscow, 117997, Russia

Vitaly Filippovich Sharov
Financial University under the Government of the Russian Federation, 49 Leningradsky Avenue, Moscow, 125993, Russia

Olga Vladilenovna Makashina
Financial University under the Government of the Russian Federation, 49 Leningradsky Avenue, Moscow, 125993, Russia

Vladimir Mikhailovich Smirnov
Financial University under the Government of the Russian Federation, 49 Leningradsky Avenue, Moscow, 125993, Russia

Abstract

Taking the Russian and the International experience, the principal aim of this study is to analyse sovereign wealth funds critically.

It remains well known that the Russian National Wealth Fund is vital in the macroeconomic policy of the Russian state. After the abolition of the Reserve Fund in 2018, the Russian National Wealth Fund has to solve a wide range of tasks. In this context, one can argue that the sovereign welfare fund is a specialised monetary fund used to stabilise the state budget when government revenues decline. The welfare fund is also used to finance government needs in the long-term period. The role of sovereign wealth funds is growing in the world. They accumulate large amounts of financial resources. Sovereign wealth funds are founded in such countries where the budget strongly depends on market factors. In most cases, these factors are global commodity prices. The funds’ money is used to cover the deficit of the relevant budget in case of unfavourable market shifts. In the period of high commodity prices, the fund accumulates an excess of export earnings. Against this backdrop, the key purpose of the study is to evaluate the efficiency of managing the National Wealth Fund in the Russian Federation. The study was carried out using the methods of synthesis, analysis, economic analysis, as well as graphic methods, and the methods of comparisons and analogies, which in turn helps in evaluating the extent of efficiency of managing the Russian National Wealth Fund.. The research findings can be used when developing an investment strategy (investment portfolio) of the Russian National Wealth Fund, through which it can aim at balancing the insurance pension system, financing of the federal budget deficit, and co-financing of voluntary pension savings. In this regard, it is imperative for the fund to perform in productive investment activities.

Keywords

global financial market, sovereign wealth funds, investments, investment portfolio

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