Despite their role in propping up the international financial system in recent months, they inspire a fair amount of paranoia. Are they pursuing a hidden agenda? How will they distort the markets?
They're able to swoop on assets during bear markets, invest in the long-term and support countries' long-term strategic objectives.
But why do funds like these have to be the playthings of oil states? Why can't we have a go? We do, after all, have a sovereign. It will give her something to do.
The idea
- Scrabble around for £1 billon of loose change in the Exchequer. Not a lot of money, but enough to make some meaningful investments
- Appoint a fund manager - the PR value for a project like this should help secure discount rates from one financial institution or another, who wants to manage it for the UK people
- Make the Queen the lead trustee
- Set some broad objectives - (eg: some money to support regional regeneration projects, some to support UK university spin offs, etc)
- Let the fund managers run it according to those objectives
- Create an endowment for the UK taxpayer - some money going back in to the fund, the rest as a dividend to the Treasury
Why might it be a good idea?
- Make some money, support some good causes, but independently run, like the Bank of England's interest rate, so as to avoid investments going to marginal constituencies, etc
- Encourage the British public to build a greater understanding of economic issues
- Call it "the people's investment fund" if you like. Turn the annual report in to a TV special, with live phone votes asking people which of the "good causes" recommended by the fund managers should be supported
- Tack the financial reporting on to the "Queen's speech" - liven up an otherwise dull few minutes with her cursing the fact that she should have got out of pumpkin futures before Halloween
Why might it be a bad idea?
- The value of invesments can go down as well as up
- Ant and Dec could end up the unwitting subjects of millions of pounds of investment when the phone votes go wrong
Vote result
Good idea: 81%
Bad idea: 19%
3 comments:
So long as Gordon Brown has nothing to do with it. He's already tried his hand at speculating in the gold markets...
Sovereign wealth funds certainly aren't all bad. Norway has a very good one (which I am sure you already know).
I don't think it should be subject to game show style coverage as it will undermine the objective of being being long term-ist. Well run managed funds are a bit dull for a reason.
Anything that can spin money out of nothing the way the City seems to do and use it for good causes rather than large bonuses looks good to me.
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