TY  - JOUR
AU  - Bernstein,Shai
AU  - Lerner,Josh
AU  - Schoar,Antoinette
TI  - The Investment Strategies of Sovereign Wealth Funds
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14861
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14861
L1  - http://www.nber.org/papers/w14861.pdf
N1  - Author contact info:
Shai Bernstein
Harvard Business School
Baker Library 220
Boston, MA 02163
E-Mail: sbernstein@hbs.edu

Josh Lerner
Harvard Business School
Rock Center 214
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu

Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA  02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
AB  - This paper examines the direct private equity investment strategies across sovereign wealth funds and their relationship to the funds' organizational structures. SWFs seem to engage in a form of trend chasing, since they are more likely to invest at home when domestic equity prices are higher, and invest abroad when foreign prices are higher. Funds see the industry P/E ratios of their home investments drop in the year after the investment, while they have a positive change in the year after their investments abroad. SWFs where politicians are involved have a much greater likelihood of investing at home than those where external managers are involved. At the same time, SWFs with external managers tend to invest in lower P/E industries, which see an increase in the P/E ratios in the year after the investment. By way of contrast, funds with politicians involved invest in higher P/E industries, which have a negative valuation change in the year after the investment.
ER  -