Last month, Norway’s Sovereign Wealth Fund reported that it had lost $174bn (£151bn) in the first six months of the year. The fund is valued at over a trillion pounds, but even so, that was a sizeable dent – a negative return of 14.4% in the first six months of the year, with the Fund’s technology holdings down by 28%.

At this point, you may be asking a simple question. What is a sovereign wealth fund? Why do some countries have them? And what’s their purpose?

A sovereign wealth fund (SWF) is a fund owned by a country, consisting of stocks, bonds, and property. You could describe them as a country’s ‘national savings’.

Generally speaking, a SWF will have its origins in a budget surplus thanks to natural resources – in Norway’s case, for example, it’s oil. Chile’s SWF comes from copper, while that of Kiribati – an island country in the Pacific – has its origins in phosphates.

Do all countries have them? No: depending on your definition, there are 193 or 195 countries in the world today.

The research we did for this article found 46 countries with SWFs, ranging from China’s (valued at $2.24tn: £1.94tn) down to the slightly more modest fund of Equatorial Guinea, which comes from oil and gas and is valued at $100m (£87m).

So not all countries have them: the UK doesn’t have one, and neither does the US – although several states in the US have them and Texas – where, of course, everything is bigger – has two.

Why do countries have SWFs? They represent a way of putting money into investments – rather than simply keeping it in a central bank or channelling it back into the economy – and many countries use them as a way of managing risk.

The United Arab Emirates, for example – with an SWF roughly equal to that of Norway – generates a large proportion of its revenue from oil exports and needs a way to protect itself against oil-based risk: a sudden crash in the price of oil.

The other advantage, of course, is that if the investments in the SWF do well, then the benefits will flow back to the country and its people. But there’s another side to SWFs: they have been criticised for lack of transparency and there have been questions as to whether they need to invest in big-name companies – especially in the sporting world.

These concerns came to a head earlier this year when Saudi Arabia’s SWF, the Public Investment Fund – which has assets of around £320bn – bought an 80% share in Newcastle United for £305m.

In percentage terms, Newcastle is a relatively insignificant investment for the PIF: but Saudi Arabia’s Crown Prince is the Chairman of the PIF – and hence the concern.

Are SWFs simply being used for personal vanity and as a way of ‘sports washing?’ After all, a subsidiary of the Qatari Investment Authority bought a controlling interest in French champions Paris St Germain.

With stock markets around the world under pressure from inflation and rising energy prices, we may well hear more stories of spectacular losses in the months ahead. Not that it will stop fans of hard-up football clubs from praying for the next SWF to come knocking on the door.