Kuwait Investment Authority
What Is the Kuwait Investment Authority?
The term Kuwait Investment Authority (KIA) alludes to a government-owned corporation responsible for dealing with the sovereign wealth fund of Kuwait. Established out of the Kuwait Investment Board in 1982, it was laid out to oversee government revenue, derived principally from the excess proceeds Kuwait procures from its oil reserves. The fund — the world's first and most established — was made to diminish the country's reliance on oil.
Grasping the Kuwait Investment Authority
Crude oil was first found in Kuwait in 1938. The country sent out its most memorable shipment of the commodity in 1946, which put Kuwait on the guide as one of the world's major crude oil producers. This supported the country's economy, leading its leaders to search for ways of investing its excess revenue.
Sheik Abdullah Al-Salem Al-Sabah made the Kuwait Investment Board in 1953 — eight years before the country's independence. The board was laid out to deal with the country's surplus oil revenue. It likewise aimed to diminish Kuwait's reliance on a single resource. This cleared the road for the creation of the Kuwait Investment Authority (KIA) in 1982 as an autonomous government body in charge of dealing with the assets of the country. The KIA is situated in Kuwait City, with extra offices in London and Shanghai.
Keen on investing in Kuwait? Consider a mutual fund or an exchange-traded fund.
The KIA, which made the world's absolute first and most seasoned sovereign wealth fund, is managed by a board of directors. This board has the authority and independence over the fund's asset allocation strategy. It is likewise responsible for the fund's performance. The fund invests generally in private and public equity, real estate, fixed income, and alternative investment markets. As per the Sovereign Wealth Fund Institute, the KIA has a total of $533.6 billion in assets.
There are three distinct principles that make up the KIA's mission statement:
- Overseeing parts of the Future Generations Fund
- Safeguarding capital and achieving long-term returns by outflanking the benchmark
- Advancing its reputation as a progressive institution that invests in the international market
The fund is one of the individuals from the International Forum of Sovereign Wealth Funds and is among those that joined to the Santiago Principles, which comprises of 24 best practices for these types of funds. The principles aim to advance accountability and transparency, along with sound investment choices among the world's sovereign wealth funds.
Special Considerations
The fund is separated into two segments — the General Reserve Fund (GRF) and the Future Generations Fund (FGF). The country's oil revenues and any income earned from the fund's investments are held in the GRF. Its assets and income might be uninhibitedly utilized by the national government. This segment invests in domestic companies, along with corporations in other Middle Eastern and Northern African countries. As much as 10% of the country's revenue and 10% of the GRF's net income are transferred to the Future Generations Fund.
The FGF is considered an intergenerational, long-term saving platform. This segment, laid out in 1976, was made with a half transfer from the GRF. The fund invests outside of Kuwait with strategic asset allocation. All income from FGF's investments is reinvested. Any transfers from the fund require a specific legislation.
Features
- The KIA was laid out to oversee government revenue, which basically comprises of the profits from Kuwait's oil reserves.
- The Kuwait Investment Authority is a government-owned corporation that deals with the sovereign wealth fund of Kuwait.
- The fund invests in private and public equity, real estate, fixed income, and alternative investment markets.
- It is partitioned into two segments: the General Reserve Fund and the Future Generations Fund.
