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Governments establish sovereign wealth funds (SWFs) to maintain financial stability during crisis and to use them as a global investment tool. Most of these funds are financed by hydrocarbon export revenues. Financial crises force governments to rethink their SWF management strategy. Russia sticks to a conservative policy with its SWFs, which means that weaker oil prices hamper funding and reduce the anti-crisis buffer.
A sovereign wealth fund is an investment fund (often state-owned, although there are exceptions – Alaska Permanent Fund (US), China Investment Corporation, etc.) that invests in equities, fixed income, real estate, and/or other FX-denominated financial assets.
The booming quantity and quality of SWFs was mostly due to strong oil prices in the early 2000s. However, the commodity market crisis has forced SWFs to alter their strategy in favour of investment in high-yield stocks and alternative assets (for example, real estate).
Russian SWFs ensured a relatively painless financial crisis of 2008–2009 and have since been supporting the nation’s economic stability, which has depleted their resources
However, the growing oil prices have mitigated the risk of the buffer being fully depleted.
Due to their structure, Russian SWFs accumulate practically no money amid low oil prices.