How sovereign wealth funds work

A sovereign wealth fund does three things: money comes in, it gets invested, and some of it goes out under a rule. This page walks through each step with real examples from our profiles.

Money in. Among core national funds the most common source is oil and gas: 32 of 78 rely mainly on oil and gas revenue. Across all 231 entities, 67 rely mainly on oil and gas, and 70 were built mainly from state company stakes. Others are filled from budget surpluses, foreign exchange reserves, privatisation proceeds, mining royalties, or, in the United States, the sale and lease of state land.

Money invested. Most large funds hold a mix of listed shares and bonds, then add property, infrastructure and private companies over time. Some invest only abroad, to keep a resource windfall from pushing up the home currency. Others invest mainly at home to build industries.

Money out. This is where funds differ most. Norway caps annual spending at the expected real return, put at 3%. Alaska pays a yearly dividend to residents. Stabilisation funds pay out when commodity prices fall. Some funds pay nothing out at all for decades.

We show the funding source and the spending rule on every profile, with a source and date. Where a fund does not publish its rule, the profile says so.