Kuwait Investment Authority - Fund Snapshot

May 13, 2013

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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 wealth fund.

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.


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