The Kuwait Investment Authority (KIA) has its roots in the
Kuwait Investment Board, which the Kuwaiti government
established in 1953. The government created the
fund’s current structure in 1984 and reorganized
it in 2006. KIA is widely considered to be the oldest sovereign
KIA oversees two funds: the Reserve Fund for Future
Generations (FGF) and the General Reserve Fund (GRF). The FGF
is funded by an annual transfer of 25 percent of the
government’s oil revenues and is invested outside
the Middle East to diversify Kuwait’s oil wealth
by KIA in Kuwait City and the London-based Kuwait Investment
Office (KIO). The GRF is the main treasurer for the government;
it receives the state revenues not allocated to the FGF, and
all national expenditures are paid out of this fund. It invests
in Kuwait and throughout the Middle East to foster economic
growth and development. It also manages the Kuwaiti
government’s holdings in domestic companies such
as Kuwait Investment Co. and Kuwait Petroleum Corp.
KIA reports to the Kuwaiti parliament annually. This process
depresses the fund’s risk profile because members
of parliament are highly critical of any losses that it incurs.
Consequently, KIA has a low risk tolerance. The fund delegates
most of its publicly traded securities portfolio to external
managers, giving them what it calls "conservative active"
mandates. KIA also invests in private equity funds, hedge funds
and real estate funds. In November 2012 it added an
infrastructure team to its personnel. The fund also invests
directly in real estate through its two property arms:
Fosterlane Management Corp. (U.S.) and St. Martins Property
Corp. (global ex-U.S.).
KIA established KIO in London in 1965. It has a more active,
direct mandate than KIA’s main investment
operations, using in-house and external managers to invest
across a range of assets.
KIA has been an important member of the International Forum
of Sovereign Wealth Funds; its managing director, Bader
al-Sa’ad, serves as deputy chair.