Fund Profiles

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Mubadala Development Company - United Arab Emirates

Mubadala Fund Profile Revenue Contribution Pie Chart Fletcher CEME SWFI Spring 2013 BulletinName: Mubadala Development Company
Country: United Arab Emirates
Established: 2002
Total Assets: US$ 53B (June 30, 2012 ) 
Ownership: Government of Abu Dhabi
Fund type: Strategic investor
Source of funds: Oil and gas revenue
Profit: $268 Million (6 months through June 30, 2012)
Office locations: Abu Dhabi, UAE
Legal Structure: Public Joint Stock Company
Key Sectors: Semiconductors, aerospace, renewable energy, Mubadala Fund Profile Total Assets by Operating Segment Fletcher CEME SWFI Spring 2013 Bulletinmetals & mining, oil and gas

Mubadala  Development Company was established by the  Government of Abu Dhabi in 2002 , and is wholly owned by  the government of Abu Dhabi, one of the United Arab Emirates. The government of Abu Dhabi owns multiple sovereign investors, including the larger Abu Dhabi Investment  Authority and the  Abu Dhabi Investment Council.   Mubadala functions as a strategic investor,  and unlike a traditional SWF, it’s mandate includes objectives in addition to financial return.  Mubadala  invests to facilitate the diversification of the emirate’s economy through investments and developing new businesses.  In practice, this means that Mubadala focuses on managing long-term, capital intensive investments that deliver both financial return and social return to the Emirate. Mubadala enacts this strategy through its nine business units, each focusing on an area the government considers important for the development of the Emirate’s economy.

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California Public Employees’ Retirement System (CalPERS) - United States

picName: CalPERS
Country: United States
Established: 1932
Total Assets: US$ 238.4B (Aug 31, 2012 ) 
Ownership: 100% State of California
Fund type: Public Employees’ Pension Fund 
Source of funds: Contributions from retirement plan participants
Investment returns: 6.9% (10 years, 8/31/12)/ 1% (year end, 8/31/12) 
Office locations: Sacramento, CA
Legal Structure: Established by California Law in 1932, managed by 13 member Board of Administration

The California Public Employees’ Retirement System (CalPERS) was established in 1932 to provide retirement benefits to employees of the State of California. It was expanded in 1939 to allow  employees of public agencies and local governments to participate. CalPERS is the largest pension fund in the United States with AUM of $234B. CalPERS provides benefits to 536,234 retirees, and has a total enrollment of 1,639,660 members. CalPERS is an agency of the state government, but it is relatively autonomous, as its Administrative Board has sole authority over the use of its funds. CalPERS invests heavily in California, with $23.8B, or 10% of the fund, invested in the state. CalPERS is known as a socially responsible investor, in particular for its shareholder activism and emphasis on corporate governance. CalPERS’ biggest  future challenge will be to maintain adequate funding levels to cover its pension obligations, which are currently 75% funded.

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Government Pension Fund Global - Norway

picEstablished: 1990
Total Assets: US$605.1 billion1 (est. April 2012) 
Ownership: 100% Ministry of Finance, on behalf of the people of Norway
Fund type: Future generation / stabilization fund 
Source of funds: Petroleum revenues
Avg. annual inflow: Approx. US$35 billion
Investment returns: -2.54% in 2011 / +7.1% in Q1 2012
Office locations: Oslo, London, Singapore, New York, Shanghai

Norway’s Government Pension Fund was set up in 1990 as a fiscal policy tool to support the long-term management of Norway’s petroleum revenue. The fund is managed by Norges Bank Investment Management (NBIM) on behalf of the Ministry of Finance, which owns the fund on behalf of the Norwegian people. The fund’s investment strategy is determined by the Ministry in consultation with NBIM management and discussions in parliament. Petroleum revenues are regularly transferred into the fund, and is primarily invested abroad to avoid over-heating the Norwegian economy. Despite the fund’s name, it has no formal pension liabilities. Rather, it is designed to give the government flexibility in terms of fiscal policy to manage economic contractions and/or reductions in oil prices. No formal decision has been made regarding when the fund will be used for pensions, but parliament adopted a “spending rule” that limits the amount spent in any budgetary year to 4% of the fund’s value in an effort to preserve the fund for future generations. The fund is known as one of the most responsible stewards and investors amongst all SWFs and pension funds.

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New Zealand Superannuation Fund (NZSF)

fundEstablished: 2003
Total Assets: US$15.5 billion (est. Feb. 2012) 
Ownership: 100% Government-owned
Fund type: Public Pension Fund 
Source of funds: Government tax revenue
Investment returns: 6.63% (since inception) / 25.05% (2010/11) 
Office locations: Auckland, Wellington 
Legal Structure: Established by law, managed by “Guardians” who report to the Minister of Finance
Key Sectors: Infrastructure, Energy, Resources, Media & Telecom

The New Zealand Superannuation Fund was established in September, 2003 to invest government pension assets with a view toward smoothing the tax burden between generations of New Zealanders, of the future cost of New Zealand Superannuation, the nation’s public pension plan. The fund is managed by a separate crown entity known as the “Guardians”, who have been given the mandate to manage the fund on a commercial basis. For these reasons, the NZSF has gained a reputation as one of the most responsible and transparent funds in the world. The fund has grown from $2.4 billion in 2003 to over $17 billion at the end of 2011. Given current forecasts, the government expects to tap into the fund in 2031 to help pay for public pensions, but the fund is not expected to peak until 2059. At present, contributions to the fund have been suspended due to budgetary pressures, but are slated to resume in 2016.

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Russian Direct Investment Fund (RDIF)

graphicEstablished: 2011
Fund size: US$10 billion
Ownership: Vnesheconombank (VEB) (100%) 
Fund type: Development Fund / Co-investment
Source of funds: Government budget / Development bank
Investment returns: N/A
Office locations: Moscow
Staffing: 15 - 25 staff

The Russian Direct Investment Fund (RDIF) was established in 2011, by the Russian Government, to make equity investments in strategic sectors within the Russian economy. The idea for the fund was conceived in 2009, as Russia emerged from the global financial crisis and embarked on an aggressive plan to modernize the economy, improve the investment climate, promote the development of innovation-driven industries, and transform Moscow into an international financial center. The fund is mandated to co-invest with large international investors in an effort to attract long-term direct investment capital. Leading institutional investors were consulted throughout the development of the fund’s strategy, and investors appear excited about having a credible local partner to co-invest alongside within the emerging Russian economy.

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China Investment Corporation (CIC)

cicCountry: People’s Republic of China
Established: 2007
Total Assets: US$409.6 billion (est. 2011)
Ownership: Ministry of Finance (China)
Fund type: Reserve Investment Fund
Source: Foreign exchange reserves
Investment returns: 11.7% (2010) / 6.4% (2007–2010) 
Office locations: Beijing, Hong Kong, Toronto
Employees: 497 (June 30, 2011)
Legal Structure: State-owned, governed by Company Law of People’s Republic of China
Key Sectors: Financials (17%), Energy (13%), Minerals (12%), IT (11%), Industrials (10%), Consumer Products (10%)

The China Investment Corporation (CIC) was established on September 29, 2007 by the Ministry of Finance to invest a portion of China’s foreign exchange reserves in international markets. It’s mission is to make long-term investments to maximize risk-adjusted financial returns for its shareholder. The initial capital for the fund was provided by the issuance of special treasury bonds worth RMB 1.55 trillion, which were used to acquire US$200 billion in reserves from China’s Central Bank. CIC has since acquired the shares of Central Huijin, a holding company that owns controlling interests in China’s state-owned financial institutions. Its global investment portfolio started out focused on the U.S. financial sector, but due to political and economic pressures, it has since diversified its focus from a geographic and a sector perspective. The CIC has grown rapidly, and at US$410 billion, it is the 5th largest SWF in the world.

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Kuwait Investment Authority (KIA)

kiaEstablished: 1953 
Total Assets: US$290 billion (est. 2011)
Ownership: Ministry of Finance of Kuwait
Fund type: Future generation fund
Source of funds: 10% of state oil revenues / investment proceeds
Investment returns: 8.5% annualized (20 years, 1991 – 2011)
Office locations: Kuwait City, London, Beijing
Legal Structure: Separate legal entity, accountable to parliament
Key Sectors: Real estate, banking, insurance

Founded in 1953, the Kuwait Investment Authority is the oldest Sovereign Wealth Fund in the world. In 1982, the Kuwait Investment Authority (KIA) was established to assume the responsibility of managing Kuwait’s state assets. The KIA manages two funds: the General Reserve Fund (GRF) and the Future Generations Fund (FGF). The GRF is the main treasurer for the government. It receives all state revenues (including oil and gas) and all national expenditures are paid out of this fund. The GRF also holds all government assets, including the Kuwait Petroleum Corporation and Kuwait’s involvement in multilateral organizations such as the IMF, World Bank, and Arab Fund. The FGF was created in 1976 through a transfer of 50% of the GRF’s assets. It’s initial mandate was to invest in assets outside Kuwait. By law, 10% of state revenues are transferred to the FGF annually. The KIA may also manage other funds entrusted to it by the Minister of Finance. The KIA is an asset manager, and does not own any of its assets.

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Temasek Holdings - Singapore

Established: 1974
Total Assets: S$193 billion (US$155 billion)
Ownership: Minister for Finance Inc. (100%)
Fund type: Savings fund / direct investor
Source of funds: State-owned assets, dividends, divestments, borrowings, bond issues, periodic cash injections
Investment returns: 17% annual (1974 – 2011)
Office locations: Singapore, China, India, Vietnam, Brazil, Mexico
Staffing: 400 staff, most based in Singapore
Credit rating: AAA (Moody’s) / Aaa (S&P)

Established in 1974, with an initial investment of S$350M, Temasek was set up to relieve the Ministry of Finance from managing state-owned assets so it could focus on developing and regulating the economy as a whole. While the initial capital investments were made up of shipyards and Singapore Airlines, in the 1990s, the government transferred control of the state telecom, power generation and port operations to Temasek. Currently, Temasek’s assets make up 10% of Singapore’s economy. Since its inception, Temasek has operated as an independent, commercial investor, focused on achieving sustainable, long-term returns for its shareholder, the Minister for Finance. Dividends are paid regularly to the Government. Temasek has no explicit responsibility for managing foreign exchange reserves or development of the economy.

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