Monitor Group and Fondazione Eni Enrico Mattei Release First Joint Annual Report on Sovereign Wealth Funds

CAMBRIDGE, Mass., May 20, 2009 (BUSINESS WIRE) --
SOVW | Quote | Chart | News | PowerRating -- Monitor Group, one of the world's leading advisory and consulting firms,
and Fondazione Eni Enrico Mattei, a leading international
research center, based in Milan, Italy, today released Weathering
the Storm: Sovereign Wealth Funds in the Global Economic Crisis of 2008,
a new annual report analyzing the effects of the global economic crisis
on the behaviors and financial transactions of sovereign wealth funds
(SWFs).

"Despite the dramatic role that SWFs have played in the international
economy, there is a great deal of misunderstanding surrounding them,"
said William Miracky, a senior partner at Monitor Group. "This report
shows that SWFs still remained important sources of liquidity and
economic investment, even as they substantially revised their investment
strategies during the economic crisis."

To address the need for mutual sharing of data around SWFs, Monitor and
Fondazione Eni Enrico Mattei (FEEM) partnered to create one of the
largest and most comprehensive databases on global SWF deals. Drawing on
their analysis of SWF transactions over the course of 2008, Monitor
Group's analysis concludes that the global economic crisis has
manifested a profound effect on investment strategy. Key findings
include:

--
Despite the crisis, the volume of investment activity remained
substantial, though the total dollar value of SWF deals declined later
in the year, dropping from $67.8 billion in Q1 of 2008 to $35.1
billion in Q4.

--
During the crisis, SWFs lost at least $55.8 billion on paper from
their initial investments. This performance is driven primarily by
their large exposure to the financial services sector, but also likely
due to unfortunate stock picking or a tendency to invest in distressed
industries as a way to minimize political or PR opposition.

--
Nonetheless, and despite representing a declining share of overall
deal activity, the financial services sector continued to be an
important target for SWF investment. In 2008, it accounted for 28
percent of the deals, worth 75 percent of the total value ($96.2
billion).

--
As the year progressed and the economic crisis spread, many funds
importantly shifted their investment strategies, retreating from
distant markets and increasing domestic and regional investments,
particularly in emerging markets. In Q4 of 2008, as funds sought to
prop up local economies, domestic investment by SWFs made up over 40%
of all deals, the highest level since 2002. In the same quarter
emerging markets investments amounted to over 70% of SWF deal value
for the first time since 2004.

Sovereign Wealth Funds Defined

In addition, a lack of clarity and consensus around what defines a SWF
prompted Monitor and FEEM to formulate a global definition to structure
discussion and research. Monitor and FEEM define a SWF on the basis of
the essential characteristics that differentiate them from other
government-owned investment vehicles. Specifically, a SWF must meet the
following five criteria:

1. It is owned directly by a sovereign government

2. It is managed independently of other state financial institutions

3. It does not have predominant explicit pension obligations

4. It invests in a diverse set of financial asset classes in pursuit of
commercial returns

5. It has made a significant proportion of its publicly-reported
investments internationally

The 2008 annual report also includes exclusive content from Monitor's
team of renowned international experts and Andrew Rozanov, who is
credited with coining the term, "Sovereign Wealth Funds." The data
compiled covers over 1,150 deals from 17 funds in 11 different
countries, for the period between January 1, 1981 and December 31, 2008.
At present, 31 funds, from 23 nations meet Monitor and FEEM's criteria
of a SWF.

Weathering the Storm is the latest in a series of reports and
quarterly updates documenting and assessing sovereign wealth fund
activity, which commenced last year with the report, Assessing the
Risks: The Behaviors of Sovereign Wealth Funds in the Global
Economy. Last week, Monitor released Testing Time: Sovereign
Wealth Funds from the Middle East and North Africa and the Global
Financial Crisis. All these reports are available at www.monitor.com.

For media inquiries around the report please contact Jordan Lubowitz (jlubowitz@racepointgroup.com).
For all other inquiries please contact Edward Chin (edward_chin@monitor.com).

About Monitor Group

Monitor Group works with the world's leading corporations, governments
and social sector organizations to drive growth on the issues that are
most important to them. The firm offers a range of services - advisory,
capability-building and capital services - designed to unlock the
challenges of achieving sustained growth. Founded in 1983 by six
entrepreneurs, including Harvard Business School Professor Michael
Porter and Monitor's current Chairman Mark Fuller, Monitor brings
leading edge ideas, approaches and methods to bear on clients' toughest
problems and biggest opportunities. Headquartered in Cambridge,
Massachusetts, the firm employs over 1,500 people in 22 countries
worldwide. For more information visit www.monitor.com.

SOURCE: Monitor Group

Monitor PR Contact : 
Racepoint Group 
Jordan Lubowitz, 781-487-4653 
monitor@racepointgroup.com

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