We Also Walk Dogs

A Community Wealth Fund Study

WAWD -

SYNOPSIS:

This is a recap of an old R&D Study on Community Wealth Funds and Sovereign Wealth Funds circa 2020.

RESEARCH:

  • What are CWFs and SWFs? What are the facts and best practices surrounding them?

DEVELOPMENT:

  • What lessons can be learned and applied for development? For whom and by whom?
  • What disruptions and innovations are coming and to be prepared for, as Yr. 2022 ends with a bang(?).
  • Why are there debates on the subject raging, like an LPA brewing into a full-fledged STORM?
  • What doors are open for the knowledgeable patriot to help in this Game of Thrones?

What is a Community Wealth Fund (CWF)?

There may not be that many Community Wealth Funds operating in the world today. It is not easy to find examples of CWFs presently operating. In the Ph, there is probably none so far. One way to understand CWFs is to understand Sovereign Wealth Funds (SWFs). An SWF is a type of CWF. Not all CWFs are sovereign.

For this white paper, a CWF is an investment fund that can be state-owned or non-state-owned. A CWF can have the characteristics of an SWF except for the attribute of sovereignty.

What is a Sovereign Wealth Fund (SWF)? How are SWFs explained by experts? What examples will illustrate a clear understanding of its significance?
“A Sovereign Wealth Fund is a state-owned fund or entity investing in real and financial assets such as stocks, bonds, real estate, precious metals, or alternative investments such as Private Equity, Venture Capital, or Hedge Funds. Most SWFs are funded by revenues from commodity exports or foreign exchange reserves held by the central bank and are invested for long-term returns for the benefit of the nation’s economy and its citizens”. Foreign exchange reserves refer to liquid foreign assets held by the Central Bank of a country. Foreign assets comprise assets that are not denominated in the domestic currency of the country, such as US Treasury Bonds and Panda Bonds.

“In general, SWFs tend to prefer returns over liquidity, making them more risk-tolerant than traditional foreign exchange reserves, according to the non-profit Sovereign Wealth Fund Institute. As described by the Institute, the traditional classifications of SWFs include:

  • Stabilization funds; Savings or future generations funds.
  • Pension reserve funds; Reserve investment funds.
  • Strategic Development Sovereign Wealth Funds (SDSWF).
  • In some cases, sovereign wealth funds will invest directly in domestic industries.

“Some countries have created SWFs to diversify revenue streams. For example, the United Arab Emirates relies on oil exports for its wealth. Therefore, it devotes a portion of its reserves to an SWF that invests in diversified assets which can act as a shield against oil-related risk. According to the World Economic Forum, as of 2018, the UAE's fund was worth about US$683 billion. The Forum also finds that Norway’s SWF, the largest single fund in the world, has exceeded US$1 trillion since 2017”.

The SWFs of Singapore are probably the most prominent among global SWFs:
Govt of Singapore Investment Corp. (GIC) is a sovereign wealth fund, with a mandate to preserve the purchasing power of SG Dollar. Its investments are limited to highly liquid foreign securities as a tool to manage the foreign reserves of SG. Temasek Holdings is an asset manager mandated to generate long-term yields and investment returns for the State assets of SG. The Monetary Authority of SG (MAS) is mandated to manage the SG Govt’s cash deposits and liquid assets.

QUO VADIS PH SWF 2022?

What lessons can be learned and applied from ongoing global best practices amid the raging storm signaling the birth of the Ph SWF?

Will it be stillborn or are we having a healthy baby that will grow to become robust and resilient from birth pains weathered and start-up adversities hurdled?

Where is the wise counsel of the knowledgeable from the Communities, the true Sovereign? Watch it coming – a stillborn baby is silent and still; watch us slap your butt, SWF, so you can cry with newborn LIFE!

Communities are sovereign; CWFs are SWFs; SWFs are CWFs…

Bob Calida
January 2020 (with addenda in 2022)
This is a summary of insights, notes, reference materials, and points, intensely researched over several months about SWFs. A collection of in-depth Q&As, commentaries, and links to references on the subject are available on request to rscalida5@gmail.com