Which SWFs is the best?

I've dealt with a few SWFs from different parts of the world and have ex-colleagues at SWFs currently.

SWFs are active in my sector internationally. I'll compare them mostly to the buyside (PE/HFs/IM). It is very hard to generalise as the term covers many different kinds of institution (Norway's Oil Fund to China's foreign currency reserves, and from the Saudi Arabian Monetary Agency to Canada's CPPIB). Some countries have more than one entity that would fall under "a" definition of Sovereign Wealth Fund.

Big Picture Big picture way to think about SWFs as a whole is that they are similar to Institutional Investors (i.e. Endowments & Pension funds) but with different liability structures due to politics. So generally speaking the pay, culture, performance orientation, and entry/exit ops are closer to those than to investment banks, private equity firms & hedge funds or large investment managers like Wellington/PIMCO... There are enough exceptions to make this not very meaningful though, as some have groups that are active investors, or are set up like holding companies/conglomerates that are more autonomous, while others are closer to a large family office.

Short version: You are the client.

The following is a generalisation. Do NOT take this as definitive for every SWF as they differ MORE among one another than the bulge bracket banks do between themselves.

1) Politics and progression - Differs from institution to institution. Generally matters less at the junior levels, more as your seniority increases. At the very top level it's entirely political. - At the more senior management levels (senior MDs, group heads, CIO, etc...) factors like your nationality become important. If you aren't a national, it is tougher to get on committees (in some cases impossible) and you could be replaced by a up an coming national for promotions. - Many SWFs are young, so you still see a lot of international talent at relatively senior roles. However, if you look at the older SWFs globally (e.g. Kuwait Investment Authority, Canada's CDPQ etc...) you will find that nationals make up an increasingly larger % of the the key decision making roles as time passes by through internal development and external hiring and will set the general strategy. You see this trend even in emerging markets. - Some deals will happen for political, strategic or other reasons that aren't related to making higher returns. You need to be comfortable with this idea, but to be honest, these are similar to many deals large corporations do for empire building, ego or during boom times. - Some SWFs have similar cultures closer to large institutional fund managers than to stodgy pension funds.

2) Salary and benefits - Differs widely. Some pay poorly, others pay very well especially on the benefits side. If they recruit experienced VPs from investment banks and investment managers, then expect pay/benefits to be good. If not, ask around. - At the senior levels can be as lucrative as any large corporation. - Don't expect carried interest or performance related bonuses in the same way as other buyside / PE / HFs, etc... - The hours and vacation time can be phenomenal at some SWFs. - Job security at the more established/boring SWFs is very good. - Do you like having Goldman VPs kissing your ass? You will be the client... for some this ego boost is worth all the money in the world. It's not for me though.

3) Work scope and performances - Depends on the actual SWF and the group you are in. - Most roles will be those of an LP type investor, e.g. asset allocation, fund manager selection, maybe co-investments. - Other roles are more direct investing and are structured more along the lines of a large investment manager. Some SWF manage certain strategies or asset classes internally. For other SWFs that are more like conglomerates your role will be similar to an internal M&A team at a large corporation. - Sometimes you will have a strategic transactions group for an SWF that works on big / special deals or on strategy. - Also, there are lots of portfolio management roles relating to looking after the companies / assets that are in the SWF. - Some SWFs have lean teams with lots of capital/deal-flow whereas others are more bureaucratic. Hard to generalise. - Despite the media rhetoric, SWFs generally actively AVOID having to make activist, hostile or even controlling investments. This is one of the reasons why they co-invest with other private sector investment managers/funds

4) How hard to get in and process? - Generally pretty difficult for non-national undergraduates with no relevant experience. Some do offer internships to people at undergrad and business school. - SWFs generally love bulge bracket sell side background in their target markets. Similarly they like reputable investment management backgrounds. - Recruiters and head-hunters are useful. - Networking & relationship matter a lot (not sure about cold calling, but referrals work).

5) Exit opportunities and how are various SWFs regarded - Some would argue that SWFs are the exit ops... - There aren't that many standard "exit ops" at the junior/mid level rather you lateral into another institutional investor with a similar strategy / market / asset class. - At the higher level you retire, go into other business or become an advisor to either the SWFs or to people trying to sell to / access SWFs. - Generally the more Western SWFs will be perceived as being more reputable for cultural reasons alone. However the older SWFs like KIA, GIC, Temasek, etc... are quite reputable. - The issue with exit opportunities is that you don't have the investing track record visibility that PE/HFs/IM has, nor do you have a book of clients apart from serving your current SWF. It makes you harder to place.

6) Which SWFs do you think is good? - Hard to say. - To work for, I would probably go for one of the mores established ones that also pays well. It would have to be a country that you would want to commit to living in for several years, so a lot of personal/lifestyle issues come into this. I would much prefer the private sector though, but it's a personal choice. - As investors, many of them don't disclose their portfolios / track records so it's difficult to assess. Some are also relatively new, so will have to give them a decade to assess performance.

Ethical considerations - Some people might have ethical considerations re legitimacy of certain SWFs... most people don't care as long as they're getting paid well, and seriously... look who's talking? (funny how that sentence could apply to nearly anyone)

For a quick overview on SWFs, check this out:

http://www.youtube.com/embed/0Y4oly7H3UE?rel=0