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The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds

Author

Listed:
  • William L. Megginson

    (Michael F. Price College of Business, University of Oklahoma, Norman, Oklahoma 73019, USA)

  • Diego Lopez

    (Global SWF LLC, New York, NY 10016, USA)

  • Asif I. Malik

    (Michael F. Price College of Business, University of Oklahoma, Norman, Oklahoma 73019, USA)

Abstract

State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and are among the most important private equity investors, and they are key investors in other alternative asset investments such as real estate, infrastructure, and hedge funds. SOIs are also leaders in promoting environmental, social, and governance policies and corporate social responsibility policies in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds, public pension funds, and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience Scoreboard for SOIs and survey research examining their role in promoting good corporate governance.

Suggested Citation

  • William L. Megginson & Diego Lopez & Asif I. Malik, 2021. "The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds," Annual Review of Financial Economics, Annual Reviews, vol. 13(1), pages 247-270, November.
    • Handle: RePEc:anr:refeco:v:13:y:2021:p:247-270
    DOI: 10.1146/annurev-financial-110420-090352
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    Citations

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    Cited by:

    1. Langenbucher, Katja, 2022. "Consumer credit in the age of AI: Beyond anti-discrimination law," LawFin Working Paper Series 42, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    2. William L. Megginson & Asif I. Malik & Xin Yue Zhou, 2023. "Sovereign wealth funds in the post-pandemic era," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 253-275, September.
    3. Wang, Li & Zhu, Jingran & Ji, Wenjun, 2025. "The long arm of the Leviathan: Common ownership and corporate greenwashing," Finance Research Letters, Elsevier, vol. 75(C).
    4. Curi, Claudia & Mancuso, Paolo & Scarpa, Alessandro, 2025. "State-owned enterprises: A bibliometric review and research agenda," Finance Research Letters, Elsevier, vol. 74(C).
    5. Narjess Boubakri & Veljko Fotak & Omrane Guedhami & Yukihiro Yasuda, 2023. "The heterogeneous and evolving roles of sovereign wealth funds: Issues, challenges, and research agenda," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 241-252, September.
    6. Hasse, Jean-Baptiste & Lecourt, Christelle & Siagh, Souhila, 2024. "Setting up a sovereign wealth fund to reduce currency crises," Emerging Markets Review, Elsevier, vol. 62(C).
    7. Lo, Huai-Wei & Lin, Sheng-Wei, 2023. "Identifying ESG investment key indicators and selecting investment trust companies by using a Z-fuzzy-based decision-making model," Socio-Economic Planning Sciences, Elsevier, vol. 90(C).
    8. Robert Grosse, . "Who owns international business?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    9. Ginka Borisova, 2025. "Heterogeneity and internationalization of government investments: sovereign wealth funds and beyond," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 56(6), pages 756-776, August.
    10. Fu, Weigang & Liu, Fangrui & Liu, Yan, 2024. "Network-based state ownership and corporate resilience: Evidence from China," Finance Research Letters, Elsevier, vol. 69(PB).
    11. Chen, Ruiyuan (Ryan) & Liu, Feiyu & Zhao, Yijia (Eddie), 2023. "Sovereign wealth funds and cost of debt: Evidence from syndicated loans," Journal of Corporate Finance, Elsevier, vol. 82(C).
    12. Ruth V Aguilera & Vicente J Bermejo & Javier Capapé & Vicente Cuñat, 2025. "The Systemic Governance Influence of Expectation Documents: Evidence from a Universal Owner," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 14(2), pages 372-407.
    13. Balestra, Anna & Caruso, Raul & Di Domizio, Marco, 2024. "What explains the size of Sovereign Wealth Funds? A panel analysis (2008–2018)," Finance Research Letters, Elsevier, vol. 62(PB).
    14. Muhammad Abid Khan,Kamran Ahsan,Muhammad Khalid Shaikh,Sana Irshad, 2025. "Fingerprint Based Smart Digital Life Certificate Using Mobile Technology," International Journal of Innovations in Science & Technology, 50sea, vol. 7(2), pages 1098-1119, June.

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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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