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This paper initiates empirical research on the financial impact and wealth effects of Sovereign Wealth Fund (SWF) investments in the stock of listed companies around the world. SWFs have recently gained media attention because of concerns about their large size (USD 3.3 trillion), extremely rapid growth rates, and lack of transparency. The authors analyze asset allocation by fund and find a significantly positive 1% mean abnormal return upon announcement of 75 SWF acquisitions of equity stakes in publicly traded companies around the world. They note that SWFs are typically long term investors who, due to both political pressures and size of holdings, are often unwilling to quickly unwind their positions.
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