Assets are better kept with SWFs

Countries with a large foreign asset base tend to establish sovereign wealth funds as central banks' portfolio diversification tends is limited, says a new paper from the San Francisco Federal Reserve.

The paper shows that central banks place a high weight on the downside risk of holding risky assets abroad and will tend to hold primarily safe foreign assets, while a sovereign wealth funds opt for a relatively greater holding of more risky foreign assets.

Click here to read the paper

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