Since the Asian financial crises where many governments were struggling to keep sufficient foreign exchange reserves, the situation is reversed now in many countries especially China and the oil producing nations of the Middle East. Reserves holdings are far in excess of the level needed for imports or for stabilising currencies.

Such secular changes in the ways reserve funds are managed from a passive benchmark portfolios to higher yielding assets have resulted in a paradigm shift in the way public funds are managed. Even for insurance funds, the investment desks are employing a more aggressive and active investment strategies with allocations into alternative assets. In Asia, Asian corporates have accumulated huge holdings of cash. FinanceAsia estimates in a research report that the asset pool of Asian institutions have grown to USD7.5 trillion in 2007.

Increasingly reserve funds most notably in the Middle East And Asia have set up massive investment funds called Sovereign Wealth Funds (SWF) that have been on the headlines recently.