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Brief introduction to the background of sovereign funds
Sovereign wealth, corresponding to private wealth, is a public wealth that is accumulated through specific tax and budget distribution, balance of payments surplus and natural resource income, controlled and dominated by the government, and usually held in foreign currency. The traditional way of sovereign wealth management is very passive and conservative, and its influence on domestic and foreign financial markets is very limited. However, in recent years, international oil prices have soared and international trade has expanded rapidly, so its management has become an increasingly important issue. Sovereign wealth funds came into being under this background. Different from traditional government pension funds and government agencies that simply hold reserve assets to maintain the stability of the local currency, sovereign wealth funds are brand-new professional and market-oriented active investment institutions.

In recent years, the number of sovereign wealth funds has increased rapidly. Countries that set up sovereign wealth funds include some developed countries and resource-rich countries, as well as some emerging market countries and resource-poor countries. The assets of sovereign wealth funds have expanded rapidly. By the end of 2006, the total assets managed by global sovereign wealth funds have reached about10.5 trillion to 2.5 trillion US dollars. At the same time, its asset distribution no longer focuses on G8 fixed-rate bonds, but focuses on global diversified asset portfolios including stocks and other risky assets, and even extends to foreign non-traditional investment categories such as real estate, private equity investment, commodity futures and hedge funds. Sovereign wealth funds have become increasingly active and important participants in the international financial market, and their market influence is also increasing.