Sovereign wealth funds emerged as early as the 1950s, and expanded in number in the 1970s especially
in oil-producing emirates, such as Abu Dhabi, as a way to accumulate current account and budget
surpluses during the oil boom. Now, Abu Dhabi boasts the largest fund, sized at USD 600-700 billion, and
other countries have followed its lead. Today, such funds hold as much as USD 2.5 trillion in assets.
In this article, I first discuss the theoretical underpinnings that have guided the investment philosophy of
sovereign wealth and then go on to compare how those investment mandates have informed actual asset
allocation decisions. I close with commentary on some special circumstances posed by funds
established in the last ten years