There is a burgeoning gap between global infrastructure needs and funding sources. Sovereign wealth funds, government pension funds, and other institutional investors could help bridge that gap. But how resistant are these funds to the highs and lows of oil prices? Can they withstand the volatility of the energy market and underwrite the major infrastructure projects so desperately needed in so many corners of the globe?
Read more about Fletcher’s programming in this area:
As part of our “10 Questions” Series, we delve into hard questions of international business not easily answered by a single book, class, discipline, or school of thought. They herald a future where the world and the world of business are ever more interconnected, where decisions can’t be made in a bubble, where real expertise demands deep ‘contextual intelligence.’ This series reflects that contextual intelligence we cultivate in our students in the MIB program.
Oil Has Sovereign Wealth Funds Hitting Sell Button
by Jess Delaney
“For a long time some sovereign funds haven’t had to worry about drawdowns, they’ve just had to continue to expand,” Patrick Schena, co-head of the Network for Sovereign Wealth and Global Capital [SovereigNet] at Tufts University’s Fletcher School. “In some respects, they have grown to a point of outgrowing their original liquidity needs for stabilization. That has informed changes in the way they allocate assets.”
Read the full article, featuring quotes from Prof. Pat Schena, in Institutional Investor
Middle-East Investors Unlikely to Play White Knight Again for European Bank
by John Letzing and Simon Clark
In addition, there is a political risk for sovereign-wealth funds seen propping up big banks with large investments, according to Patrick Schena, an adjunct professor at the Fletcher School of Law and Diplomacy at Tufts University.
“There is a very fine line between being an investor of last resort and being involved in a rescue or bailout,” Mr. Schena said.
Read the full article with quotes from Prof. Schena in the Wall Street Journal
“Inside Bahrain’s Sovereign Wealth Fund Mumtalakat”
by Jess Delaney
Like a young Temasek in its first decade of existence, Mumtalakat’s mandate is to play the role of a state entrepreneur, to make investments in related companies and infrastructure to help build the domestic economy — a role that Bahrain’s nascent private sector is unable to undertake,” says Ravi Shankar Chaturvedi, a research fellow at Tufts University and author of an academic case study of the fund. Both entities tap global bond markets for financing and were created to turn around state-run businesses and attract investment to diversify their domestic economies, he adds.
Read the full article featuring Ravi (MIB 2012) at Institutional Investor
“Market upheaval forcing many sovereign-wealth funds to adapt”
by Sue Chang
“For funds that are resource-based—particularly oil—dramatic drops in price will affect the rate and scale of their future accumulation of new assets, while potentially requiring assets sales or outflows to fund possible fiscal deficits,” said Patrick Schena, co-head of SovereigNET at the Fletcher School at Tufts University.
Read the full article, featuring quotes and insight from Prof. Schena, in MarketWatch
“The Triple Threat Facing Sovereign Wealth Funds”
by Richard Teitelbaum
“There are some funds that have taken it on the chin on the governance front,” says Patrick Schena, co-head of the Fletcher Network for Sovereign Wealth and Global Capital, at the Fletcher School of Tufts University, outside Boston. “They are feeling pressure. The media scrutiny is certainly there — international media, but also local. There’s also interest from the opposition politically.”
Read the full article featuring quotes from Prof. Schena in Institutional Investor
“Norway’s ‘oil fund’: Is it making businesses behave better?” by Cristina Maza
“Norway’s sovereign wealth fund is among the largest, and some would argue it is the largest. But more importantly [it is] also viewed really positively for its leadership,” says Patrick Schena, assistant Professor of International Business Relations at the Fletcher School at Tufts University and co-head of SovereigNet, the Fletcher Network for Sovereign Wealth and Global Capital. “So not only governments, but other pension funds and other asset owners and large investors, will look to Norway and engage with what Norway is doing. When it comes to other investors, it’s influential given its size.”
Read the full article featuring Prof. Schena in the Christian Science Monitor