From ministries to markets

There are reports that India is looking to set up asovereign wealth fund (SWE).

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The idea of an SWF isn’t new.

The first SWF was created in 1953 by Kuwait to invest its oil wealth for future generations. Since then, two waves of such funds have reshaped how nations manage their assets. The first wave in the 1970s and 1980s came from oil-rich countries like Abu Dhabi and Brunei, seeking to stabilise volatile commodity revenues, and Singapore, aiming to be fiscally prudent by professionalising how government companies were run. The second wave, in the 2000s, was driven by fast-growing, export-led economies such as China, Korea, and Russia. These countries wanted to diversify their reserves away from US Treasuries and earn better, long-term returns.

Today, SWFs collectively manage over $11 trillion, making them some of the most powerful investors in the world. Within these funds, Temasek stands out as both a pioneer and a departure. While it shares the essential characteristics of sovereign wealth funds as enunciated in the Santiago Principles, it serves as an example of what's possible when the state behaves as a smart owner. Temasek wasn’t built on oil or foreign-exchange reserves. It began when Singapore transferred ownership of companies like Singtel, Singapore Airlines, and DBS Bank into a single investment holding company. Temasek then diversified globally, reinvesting profits and expanding beyond national borders. It pioneered the “state-as-shareholder” model, proving that public ownership and commercial performance can go hand in hand.