Saudi Arabia’s sovereign wealth fund takes a hit

Saudi Arabia’s sovereign wealth fund recorded losses of $11B last year, down from the $19B in profit it made the year prior. The kingdom’s $700B fund is aiming to amass $2T in assets before the end of the decade.

Sovereign wealth funds are state-owned funds that invest a country’s surplus cash, often generated through activities like commodity exports. They’re like private funds, but with fewer fleece vests.

And whether they admit it or not, sovereign funds are geopolitical tools:

Intrigue’s take: Who wouldn’t love to have a vast pile of cash, right? These funds can help stabilise an economy, generate income without levying taxes, finance massive national projects, or you can just go full Scrooge McDuck.

But they come with risks: without transparency or accountability, some funds can quickly burn public money through incompetence and corruption. And even the most ridiculously transparent and accountable country (we’re looking at you, Norway) can suffer brutal years in the market (see below).

Still, we’d rather have a vast pile of cash than… not have a vast pile of cash.

Also worth noting:

  • Norway’s fund reported a record $164B loss last year, citing Russia’s invasion of Ukraine, high inflation, and rising interest rates.
  • Singapore’s fund also just recorded its worst result in years, partly due to its stake in crypto platform FTX (remember them?).
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