Our SWFs are furiously investing overseas

Recently it was reported that our SWFs were investing in micro financing in China and India, lending money to the poor to do small businesses. If the objective is to do charity and philantrophy, I think this is a worthy cause. Yesterday it was reported that one was investing in Bollywood. And there was the fame investment in a childcare chain in Australia. Last time a GLC with a niche in heavy industry and engineering went into fast food business.
 
The impression given is that they will invest in anything that they think can make money. You know what am I thinking? What’s next would they be investing, the oldest profession?
 
What is the driving force in the SWF’s investment strategy? Do they have a clearly defined mission or is the mission simply to invest and to make money? The fear of SWFs blindly investing in anything that came along is always there. There are two factors that could lead to this kind of no strategy and directionless investment strategy. One, the abundance of funds and not knowing what to do. Secondly, there are too many highly paid fund managers who have to show their worth and also to generate profit to be rewarded with big bonuses.
 
A fund that has too much money is a good thing. But this can be a dangerous thing as well when there is a fear of not investing. The money cannot be left idle. So, instead of waiting for the right opportunity, for a good investment to come along, they went shadow chasing. Anything that moves, buy. Would be wiser to only invest in the right thing, solid investment like blue chip companies, and not in anything? Even blue chips or the best of blue chips can be dangerous, just don’t be conned.
 
With so many fund managers managing the funds and needing to prove themselves and wanting to have a big share of the bonuses, and with the mentality that it is other people’s money, the tendency to invest for the sake of investing is always there. Not investing is like not working and not putting in a bet for the big bonus payout. The reward system only rewards good returns not prudence. Prudence doesn’t pay.
 
SWFs that are managed by professional managers run the risk of gambling when every fund managers are playing high stakes for high returns with OPM. A SWF may be better managed by financially trained civil servants that take a longer perspective and showing more care and prudence in handling public funds. And the reward system must take cognizance of the risk versus caution divergence. Both are equally important. 

Rewarding only big risk takers will incur the big risk of losing everything when they invest in snake oils, including you know what and when due diligence is best forgotten. Geylang would make an extremely great enterprise when reorganized under professional management. Gambling dens too will generate exceptional returns.
 
Are there moral considerations and stringent criteria and guidelines laid out to govern the way fund managers managed SWF’s money? I am very sure they have. Or is it a case of as long as it can make money go for it? Investing SWF is investing the people’s savings, the CPF money that the people slogged for a life time and cannot be lost by wild gambling and punting. The guardians of the people’s savings must be prescient and cast a watchful eye over how the money is thrown around the world. It is not Other People’s Money. It is The People’s Money. The people did not ask that the money be used for gambling, to take high risk, like private funds and hedge funds with willing investors knowing what they are in for. The SWF’s owners are captive prisoners that have no choice in how their money is being used.
 
The guidelines in how these money can be used must be very stringent and not to take high risk, not to invest when there is nothing good to invest. At times it is better to earn that little interests or dividends and wait for a better opportunity to come along. The two wrong reasons to invest are: One, a lot of money, so must invest. Two, must invest to show profit, so as to be rewarded.