The Review of Sovereign Wealth Fund and Portfolio in Indonesia

Abstract

This article is a literature study of the Sovereign Wealth Fund as a large fund owner and an investor in various destination countries. SWF is the target of countries and companies that want fresh funds as capital inflow to finance their activities, both as direct investors and buyers of bonds and stocks. SWF has become an important investor and as a holder of various portfolios it aims to obtain optimal returns with minimal risk, including the placement strategy of Sovereign Wealth Fund as part of a hedge against the economic risks of the countries holding SWF funds. The Sovereign Wealth Fund's largest strategic asset allocation shows that it is broadly consistent with that generated by the Markowitz model. Investment performance and company performance as well as the policies of the SWF destination countries are the main factors in the placement of funds. The choice of investment is very dependent on the assets associated with the asset class, risk tolerance and the strategy mandated to achieve the stated portfolio goals. Includes proper asset weight balancing that allows for higher returns and long-term achievement of investment objectives.