How to Navigate a Crisis: Do Nothing

Ashby Monk

For the next six months, the Qatar Investment Authority will literally do nothing. According to Hussein al-Abdullah, executive director of the QIA, they will only add “doing something” to the agenda in the second half of 2009–at which point they will begin a review of the SWF’s investment strategy. After the hiatus and the review, it is anticipated that QIA will refocus investment activity towards “commodities, food, energy and water”. Clearly, the QIA (like many other SWFs) has suffered considerable losses in the financial crisis and simply wants to take a step back and re-evaluate.

As perhaps the longest-term investors in the world, SWFs are better able to “do nothing” than their institutional cousins (pensions, endowments, etc) that have pressing liabilities. Nevertheless, with distressed assets trading at significant discounts, QIA could better use the next few months by buying up illiquid asset classes that are currently under-priced due to the prevalent liquidity concerns; over the long term, these illiquid investments could turn a nice profit. Nevertheless, of the available options, doing nothing is a better choice than buying high and selling low–a fate many pension plans currently find themselves confronting.

4 Responses to “How to Navigate a Crisis: Do Nothing”

  1. 1 miamiohio June 19, 2009 at 7:06 pm

    Perhaps the QIA is ready to make a splash again, specifically by buying voting shares in Porsche. It will be interesting to see how German regulators respond to this development given their opposition to SWFs in general, that will only be amplified by the interest in voting shares.

  1. 1 Sovereign Welfare Funds « Oxford SWF Project Trackback on March 29, 2009 at 4:41 pm
  2. 2 Withdraw and Regroup? « Oxford SWF Project Trackback on April 8, 2009 at 1:44 pm
  3. 3 QIA Changes Strategy from ‘Do Nothing’ to ‘Do Something’ « Oxford SWF Project Trackback on November 10, 2009 at 3:31 pm

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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