'Politicized' sovereign funds earn lower returns, study says

Published December 23, 2015 This content is archived.

An article in The Wall Street Journal reports on research by Veljko Fotak, assistant professor of finance in the School of Management. The research found that stock purchases by highly politicized sovereign-wealth funds were associated with lower returns than independent, private investments. “This discount is much worse for the funds which we identified as politicized – funds with weaker protection from government interference. The most sophisticated or protected sovereign-wealth fund is Norway’s and it is seen as a model for political independence. We find that Norway is not associated with political interference. There is no discount when the Norwegian fund buys stocks.”

http://www.wsj.com/articles/politicized-sovereign-funds-earn-lower-returns-study-says-1450866422