What is a Sovereign Wealth Fund?

As Humpty Dumpty said in Alice in Wonderland, "a word means what you chose it to mean, neither more nor less." Semantic freedom makes amusing nonsense, but poor analysis. It bedevils discussion of sovereign wealth funds, because different people have used the term with different meanings and, more importantly, with different intentions. Just look at the diversity of origin and motivation behind institutions that are commonly described as sovereign wealth funds. There is Singapore's Temasek Holdings, which embodies a conscious long-term policy strategy of sovereign foreign investment by a small country seeking diversification of its nation's assets. China's China Investment Corporation is a more or less accidental outcome of an exchange rate strategy which may or may not persist. Then there are also the non-renewable resources funds (e.g. the Abu Dhabi Investment Authority) with their resource-depletion and inter-generational issues. There are also government pension funds (c.f. Australia's Future Fund and many others), which in practice behave in the same way as private funds, seeking diversification by investing some part of their funds overseas…