Look out Norway and Saudi Arabia — Alberta is back in the sovereign wealth fund game.
Driving the news: The Alberta government announced a fresh $2.8 billion investment in the Heritage Fund, the province’s sovereign wealth fund. The goal is to have $250 billion in assets by 2050, with $10 billion from interest used annually to pay for government expenses.
- The fund was established in 1976 to supplement government revenue when oil and gas revenues dried up. However, most investments in it were made before and during the mid-1980s.
- The Heritage Fund Opportunities Corp., established last year, will oversee the fund with a structure that could encourage bigger-ticket investments.
Why it matters: The fund represents a long-term strategy by Alberta for greater financial independence. It has already doubled to $30 billion over the past five years and is a big part of the provincial government's plans to fund future spending.
- Using future fund revenues for government expenses is different from Alaska, which provides residents a dividend of around $1,000-$2,000 per person per year.
Zoom out: While $250 billion (in 50 years that is) sounds like a lot, Norway’s Government Pension Fund Global currently has $1.9 trillion and Saudi Arabia’s Public Investment Fund is at around $941 billion in assets.—GS