US tax implications for sovereign wealth funds of financial derivative investments (PricewaterhouseCoopers)

December 2010

KEYWORDS: Sovereign Wealth Funds, SWFs, derivative, controlled commercial entity, Section 892 Exemption, United States, tax, Short Selling


Philip Sutton, John Mattos, Rebecca Lee, Robert Saltzman

  • PricewaterhouseCoopers


SWFs have begun hedging the foreign currency and interest rate exposures on their investments with financial derivatives. Further, SWFs have also begun to utilize financial derivatives to achieve the fundamental economic exposure that their fund managers may be seeking. SWFs are key investors in many onshore and offshore fund complexes. Fund managers for these fund complexes also have expanded their investment parameters in similar ways to achieve the returns they are seeking.

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