They are not alone. This year has already seen the emergence of several new SWFs; Dubai launched a new multibillion-dollar SWF in March as it looks to extend its reach in globally. Unlike the existing Dubai International Capital (the investment arm of Dubai Holding), the Investment Corporation of Dubai is to be backed by state money and not just the personal wealth of the ruling Maktoum family. It recently tabled an offer to buy an 85% stake in Inmobiliaria Colonial, the Spanish property group, for about €9bn.

Russia launched its National Welfare Fund (NWF) on 1 February with a birth weight of around $32bn drawn from the existing $156.8bn Oil Stabilisation Fund (OSF). Japan is planning to set up an SWF, with a $20bn share portfolio expected to swell on the back of Japan’s $1 trillion cache of foreign currency reserves.

The Indian government is also debating setting up an SWF, similar to Singapore’s Temasek, with an initial $5bn. This would use a small portion of India’s growing foreign exchange reserves – $291bn at 8 February, up 57% from a year earlier – to invest in energy assets abroad.

Many of these SWFs are looking for more than just an investment return: they are also seeking strategic access to the global financial system and expertise – and the sub-prime crisis and ensuing credit crunch has provided such an opportunity.

The Government of Singapore Investment Corp (GIC) has agreed to inject $10.3bn into UBS for a stake of around 9%; Merrill Lynch wrested $7.5bn from Singapore’s Temasek fund; Morgan Stanley has received $5bn from China Investment Corporation (CIC), while in February the $60bn Qatar Investment Authority (QIA) bought just less than 2% of Credit Suisse. It also said it wants to spend between $10bn and $15bn on bank stakes over the next two years and plans to double in size by 2010.

QIA and Borse Dubai, an SWF affiliate of the state of Dubai, have both ratcheted up big positions in the London Stock Exchange, the Nordic and Baltic exchange OMX and the US-based NASDAQ as the exchange sector lurches into the throes of consolidation.

Needless to say all this activity has not gone unnoticed. US lawmakers have sought assurances that SWFs would not be used to further political goals while the EU threatened to restrict SWF investments by if they failed to disclose more information about their strategy and intentions.

As a result, both the International Monetary Fund and the Organisation for Economic Cooperation and Development launched multilateral efforts to agree a set of best practices for SWFs and a code for recipient countries respectively.

A breakthrough was achieved in March when US Treasury secretary Henry Paulson, GIC deputy chairman Tony Tan and ADIA executive director Hareb Masood Al- Darmaki, agreed basic principles to govern SWFs and the countries they invest in.

The statement said SWFs should make a formal statement that “investment decisions should be based solely on commercial grounds, rather than to advance, directly or indirectly, the geopolitical goals of the controlling government.”

The principles also seek strong disclosure and governance standards by SWFs, which should compete fairly with the private sector and obey local laws. Meanwhile, recipient countries should not be protectionist or discriminate against SWFs. They should also have predictable investment rules and be “as unintrusive as possible, rather than seeking to direct SWF investment”.