Please cite this article in press as: Boubakri, N., et al., Sovereign wealth funds targets selection: A comparison with pension funds. J. Int. Financ. Markets Inst. Money (2016), http://dx.doi.org/10.1016/j.intfin.2016.01.004 ARTICLE IN PRESS G Model INTFIN-845; No. of Pages 17 Int. Fin. Markets, Inst. and Money xxx (2016) xxx–xxx Contents lists available at ScienceDirect Journal of International Financial Markets, Institutions & Money journal homepage: www.elsevier.com/locate/intfin Sovereign wealth funds targets selection: A comparison with pension funds  Narjess Boubakri a , Jean-Claude Cosset b , Jocelyn Grira c,∗ a American University of Sharjah, United Arab Emirates b HEC Montreal, Canada c UAE University, United Arab Emirates a r t i c l e i n f o Article history: Received 31 May 2015 Accepted 20 January 2016 Available online xxx Keywords: Sovereign wealth funds Pension funds Investment strategy a b s t r a c t This paper investigates the determinants of sovereign wealth funds’ (SWFs) decisions to invest in publicly traded firms in comparison to pension funds. Using a sample of 344 firms targeted by SWFs over the 1991–2011 period and a control sample of 663 firms targeted by pension funds, we find that SWFs, in comparison to pension funds, are more likely to invest in firms operating in strategic industries as defined by Fama and French (1997) (financial sector, natural resources, mining, transportation, telecommunication and utilities) and in countries with sustainable economic growth and weak legal and institutional environment. Our findings are robust to disproportional size of some SWFs, their financing sources, their transparency level and acquisition activities during the recent financial crisis. © 2016 Elsevier B.V. All rights reserved. “China Investment Corp (CIC), the government’s 747 $billion sovereign wealth fund, is shifting its focus to US investments and broader global ambitions as it prepares to move its North American headquarters to New York from Toronto early next year (. . .). CIC’s new appetite for US investments would likely attract political scrutiny in Washington, where concern is growing that China is seeking to boost its influence in key sectors of the American economy. CIC declined to comment.” The Telegraph. December 14th, 2015 1. Introduction Sovereign wealth funds (SWFs hereafter) are investment funds owned by sovereign entities or governments (Knill et al., 2012b). They are mainly funded by foreign exchange reserves stemming, for the commodity financed SWFs, from the sale of natural resources 1 (Kotter and Lel, 2011). In December 2015, the SWFs’ Institute identifies the Norwegian SWF as the largest in the world with 825 $billion assets under management, 2 followed by the Emirati SWF, Abu Dhabi  We gratefully acknowledge financial support from HEC Montreal and Institut de Finance Mathematique de Montreal (IFM2) as well as the UAE University (Start-up grant # G00001589). ∗ Corresponding author. Tel.: +971 50 239 3715. E-mail addresses: nboubakri@aus.edu (N. Boubakri), jean-claude.cosset@hec.ca (J.-C. Cosset), jocelyn.grira@uaeu.ac.ae (J. Grira). 1 Commodities mainly include oil, gas, diamonds, and copper. 2 Interestingly, the Norwegian SWF was the smallest SWF in the world in 1996 (Chambers et al., 2012). http://dx.doi.org/10.1016/j.intfin.2016.01.004 1042-4431/© 2016 Elsevier B.V. All rights reserved.