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Best Practices of Sovereign Wealth Funds: The Case for The Philippines

Many nations create sovereign wealth funds (SWFs) to invest surplus assets in a diversified portfolio approach to achieve national policy goals, hedge against economic risk, and benefit successive generations. These funds have grown in popularity over the past half-century, and for good reason: Well-structured funds work very well.

The Republic of The Philippines is one of Southeast Asia’s fastest-growing economies and has a broad range of physical, financial, and human capital assets. It is still, however, a developing country. While prior administrations have considered establishing an SWF, designs for the fund have never been finalized. The structure and guidance, however, are in place.

To support the establishment of an effective SWF in the Philippines, the Milken Institute held a Financial Innovations Lab® to explore options regarding a new fund. This report summarizes the Lab and lays out recommendations and paths forward in three crucial areas of concern: purpose and funding, governance and operations, and investment and performance management.