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RESEARCH PROJECT 2

195/200 = 98%/A

Shekima Jacob

South University

Timothy Smith

Research Project

Introduction

Large publicly held pools of assets are playing a progressively more important role in the worldwide investment grounds. This research will review preceding studies on ways to improved protected discreet and economically sound public fund executive practices in these funds, as well as how to assess their authority and investment policies and how to enhance shield to the assets from political interventions.

Government investment funds or the future funds are managed and controlled in regard to the opportunity and risks associated with them (Bohn, 2002). Representation from the retirement fund and corporate finance literature, we can as well create a connection to their supervision to administration practices and country-specific personalities, and distinguish those with practical findings on connections with corporate governance.

General Purpose Statement

This paper analyzes innovative information regarding best practice administration practices for such publicly-managed speculation pools, spotlighting particularly on control and coverage patterns beside with how one may try to find protection of the assets from political intervention (Friend & Jessop, 2013). We do so to gather lessons on which domination and accountability methodologies emerge to be well suitable in the case of these publicly held assets finances, and we also illustrate out strategies assumptions concerning governance improvement.

We illustrate that these publicly-controlled investment funds have the various diverse historical background, as well as a determined buildup of economic surplus alongside potential economic distress (Jen, 2007). Evaluation of how good management of the public investment funds will influence funds performance by use of the metrics available. Also, we evaluate the literature concerning the outcome of administration practice on presentation of civic investment funds and exploration of the accountability and investment policies available.

The Nature and Varieties of Public Investment Pools

We will evaluate the three main forms of investible assets including the foreign exchange reserve fund, sovereign wealth funds, and public pension funds. The currency stabilization funds or the foreign exchange reserve funds are liquid assets that are held in form of short term papers or commodities (Friend & Jessop, 2013). The sovereign wealth funds government investment that controls their assets separately from the foreign exchanges reserves and is accumulated from natural resources taxes or fiscal surplus. While the public pension funds are built up through the explicit funded organization or the excess contribution over the demographic transition.

This pension funds have long-term nature of liabilities and are limited to immediate liquidity and public pension funds are regularly intense in government bonds as an end result of open policy or institutional traditions. Sovereign wealth fund among the three has been growing gradually hence the permission to the greatest investment flexibility (Bohn, 2002). some of the Sovereign Wealth Funds were recognized to control the inter-temporal distribution of resources realized by the discovery and development of non-renewable natural reserves, while others were set up to compensate the government fiscal surpluses predictable to be exhausted in the future.

The literature on what comprises for a high-quality management in public investment funds has focused on the main or public sector pensions rather that the public managed asset groups in a general view. The World Bank provides the initial standards that can be utilized to describe the management practices. They include governance, accountability, and investment practices. Governance is the process and system that will be utilized to the maximization of a given welfare that resolves the conflicts of interest among stakeholders (Jen, 2007). Accountability is the credibility and transparency utilized in presentation of the governance and outcome reports to the shareholders. Investment practice is the process used in the development of investment profiles that provide the equilibrium on risks and returns with the perspectives of the liabilities made in explicit (Friend & Jessop, 2013).

The management of the public investment fund has significant effects to the community in many ways as some of the public trustees use the money to finance their political parties leading to negative effects of disbursement of resources in the community. The use of the public funds to develop or construct private organization is due to lack of proper utilization of the management standards of governance, accountability, and investment.

Conclusion

Our evaluation of the major categories of public investment pools having enduring objectives points out that pension fund and Sovereign Wealth Funds contribute to many commonalities with consideration to their goals and justification (Bohn, 2002). However, experimental evidence on these conclusions for publicly-managed asset pools is inadequate or limited, and what there is a tendency to be still on the organization of liabilities unreservedly or openly associated with these funds. A structure on previous studies, we developed the performance criterion concerning fund governance, accountability, and investment policies which should be utilized to ensure management and control of the public investment funds.

Reference

Bohn, H. (2002). “Government Asset and Liability Management in an Era of Vanishing Public Debt” Journal of Money, Credit and Banking 34(3): 887-933.

Friend, J., & Jessop, N. (2013). Local Government and Strategic Choice (Routledge Revivals): An Operational Research Approach to the Processes of Public Planning. Routledge.

Jen, S. (2007). Sovereign wealth funds. World economics, 8(4), 1-7.