TAILIEUCHUNG - Sovereign Wealth Funds-State Investments On The Rise

Mutual funds are not covered by the Canada Deposit Insurance Corporation, the Autorité des marchés financiers’ fonds d’assurance-dépôts (Québec) or other deposit insurance. However, there are some safeguards in place to help protect investors. For example, a mutual fund’s assets must be held separately by a third party called a custodian. This is usually a chartered bank or trust company. Also, an independent auditor reviews and reports on the fund’s financial statements each year. If a firm goes bankrupt There are two funds in place that may help protect your investment if the firm you dealt with goes bankrupt | tf G 3 tn uj c G 3 Õ September 10 2007 Deutsche Bank Research Sovereign wealth funds -state investments on the rise International topics State-owned investment funds are on the rise already managing assets in excess of USD 3 tr . twice as much as the global hedge-fund industry but still a fraction of other investor categories. Given the growth dynamics sovereign wealth fund SWF assets could grow to over USD 5 tr within the next five years and more than USD 10 tr within the next ten years. Given such growth further diversification and focus on returns liquidity inflows into a wide range of asset classes can be expected. At the same time demand for asset management and investment banking services by these funds is set to increase. SWF growth carries implications for global financial market stability corporate governance and national interests. Public policy should be directed by key principles Open markets for foreign investments by SWFs as a general rule. Reciprocity in openness of market access. Political intervention with politically sensitive investments as a last-resort option and only in cases where national security is under threat. Decisions should be based on pre-defined principles. Within the EU the design of measures and instruments should be coordinated. Greater transparency of SWFs should be achieved through internationally agreed codes-of-conduct and yardstick best practices devised . in the context of the IMF. On market access debate at the national and EU levels is characterised by diffuse concerns and uncoordinated initiatives. There is an urgent need for greater appreciation of the potential benefits of SWF commitments as well as a sober assessment of the risks involved. dbresearch Author Steffen Kern 49 69 910-31889 Editor Bernhard Speyer Technical Assistant Sabine Kaiser Deutsche Bank Research Frankfurt am Main Germany Internet E-mail Fax 49 69 910-31877 Managing Director Norbert .

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