This week, we discuss the topic of Sovereign Wealth Funds (SWFs), funds that invest on behalf of their nations. The growing focus on these entities is yet another sign of the changing nature of the world economy, and is linked to the emergence of the BRIC economies and their rapidly rising financial wealth. Although SWFs are not new, their profusion, scale and diversity of activity are attracting the attention of financial market participants and Western policymakers. The sheer scale of some of these SWFs reflects the massive growth in foreign exchange reserves of many big developing economies. Moreover, one can broadly distinguish between two categories of SWF: those whose vast growth reflects their country’s rich commodity endowment, and those that reflect large foreign exchange intervention activities. It makes sense for these entities to invest more in equities rather than in the most liquid fixed income products, and for them to diversify out of the Dollar.