Sovereign Wealth Funds (SWFs) represent special purpose investment funds which are set up by governments to achieve macroeconomic purposes such as investing the returns generated from non-renewable commodity exports (e.g. oil and gas) in order to increase savings for future generations and help reduce boomand- bust cycles driven by fluctuations in commodity export prices. At times, SWFs are also established out of non-commodity sources of funds—such as proceeds from privatisation, balance of payments surpluses and official foreign currency operations, among others—to manage assets for achieving governments’ financial objectives.
SWFs have been growing in number and size over the years, in both Muslim and non-Muslim countries. Overall, some 41% of SWFs are established in member countries of the Organisation of Islamic Cooperation (OIC);1 and these represent about USD 2.93 trillion (44%) worth of SWF assets under management out of the total value of USD 6.73 trillion as at August 2014 (SWFI, 2014a). Their importance in terms of potential impact on the economic, social and political fronts of both the home countries (managing the SWFs) and the host countries (receiving the investments of SWFs) has drawn increasing attention to the operations of SWFs in order to articulate the best governance structure and international practices to be adopted by them.