David Murray: SWF Myth Buster

Ashby Monk

As David Murray prepares to step down as Chairman of the International Forum of Sovereign Wealth Funds and return to his full-time gig as Chairman of Australia’s Future Fund, he is taking a final shot at SWFs’ critics. Specifically, Murray has released a position paper that defends the status and interests of the IFSWF membership against, what he calls, “myths and misinformation”. Here’s how he motivates his argument:

“Rather than ushering in a deeper understanding of sovereign funds, the growing pool of commentary remains plagued by myths and misinformation. This has unfairly given rise to some negativity and skepticism that seems unjustified given the track record of SWF investment…The cumulative effect of these unchallenged myths produced a dichotomous view of sovereign funds.  On the one hand, the SWF group is seen as homogenous, requiring uniform standards and benchmarks.  On the other hand, among institutional investors generally, the group is viewed as having differing objectives and investment drivers.  Both views are misplaced, leading to unnecessary and potentially harmful differential treatment.  In fact, the opposite of these views is true.  There are marked differences among SWFs given their different objectives and mandates and country circumstances, and it is not the case that as a group, they are different from other commercially-focused investors.  But to appreciate this reality, we must dispel the myths.”

As you will see, Murray does a pretty good job of busting SWF myths. For example, he convinces the reader that: SWFs aren’t all the same; SWFs can’t all be benchmarked against each other; best practices don’t exist among such a diverse community of funds; and some other important things. I doubt frequent readers of this blog would have their eyebrows raised by any of his points, but there is no doubt that some policymakers, academics and media representatives could benefit from a close reading of Murray’s paper.

Now, that’s not to say I agree with everything in the document; there were a couple of ‘straw men’ characterizations in there that I could argue about. But, in this case, Murray gets a pass. Why? He’s making an argument in defense of his membership; the paper should be read and interpreted accordingly. Also, he’s attempting to level a playing field that has been a bit uneven for a few years. So it’s a welcome intervention.

Anyway, the more pressing issue in my mind is whether the IFSWF’s next chairman will follow Murray’s lead and be more pro-active in defending the interests of SWFs or revert back to the “once a year” engagement strategy we’ve seen from the IFSWF since 2009…more on that tomorrow.

3 Responses to “David Murray: SWF Myth Buster”

  1. 1 Sven Behrendt May 12, 2011 at 11:03 pm

    I for sure do raise my eyebrows when I read a paper claiming “to provide a true reflection”. Well, striving for “truth” is a matter of discourse, I guess. And the IFSWF has not been a particularly active participant in that discourse since its inception, as you repeatedly pointed out, Ashby. But I agree, Murray’s paper is a welcome contribution that I am sure will now find its way into the global policy discourse.

  2. 2 MMcC May 13, 2011 at 7:52 am

    I have to admit, I have trouble seeing a CIC-led IFSWF taking to the PR battlements. Not really their style and Jin Liqun has not proven to be terrifically quotable in past. I’d bet on “Strategies to Achieve Greater Harmonization Among Member Organizations’ Reporting Formats” being a higher priority.

  3. 3 Ashby Monk May 13, 2011 at 8:21 am

    Thanks for the comments, guys. Thoughts on the Beijing Communique?

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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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