Sovereign wealth fund

A government-owned special-purpose investment fund or arrangement. Funding can come from fiscal or commodity surpluses, privatization proceeds, or other government transfers. Its investment mandate differs from ordinary central-bank reserve management.

Sovereign wealth fund in practice

Hypothetical: a sovereign wealth fund invests as a limited partner in a buyout fund and separately co-invests in selected deals. Co-investment may reduce external fund fees under the agreed terms, but internal diligence, administration, and investment risks remain. Overall costs need not fall.

LP · Co-investment · Committed capital & capital calls · Anchor investor · All of the glossary