part I
THE ASSET OWNER
CHAPTER 1
Asset Owners
Chapter Summary
All asset owners—from the very largest sovereign wealth funds (SWFs) to the
smallest individual investors—share common issues in investing: meeting their
liabilities, deciding where to invest and how much risk to take on, and overseeing
the intermediaries managing their portfolios.
1. Timor-Leste
The Democratic Republic of Timor-Leste is a small country of a million people in
Southeast Asia.1 It lies northwest of Australia and occupies the eastern half of
Timor Island along with an enclave in the western part of the island. The rest of
the island belongs to Indonesia.
In the sixteenth century, the area that is now Timor-Leste wascolonized by the
Portuguese, who introduced Catholicism, which remains the dominant religion,
and coffee, which is the mainstay of Timor-Leste’s low-productivity agricultural
economy. During World War II, the Australians and Dutch landed in Timor-Leste
to fight the Japanese. World War II devastated the country, and recovery under
reinstated Portuguese rule was slow.
When Portugal began to withdraw from its overseas colonies, civil war broke
out in Timor-Leste. The Revolutionary Front for an Independent East Timor
(Fretilin) declared independence in November 1975. Fearful of a Marxist state on
its doorstep, and with the support of Western governments amid the Cold War,
Indonesia invadedless thanamonthlater,andinJuly1976,declaredTimor-Leste
its twenty-seventh province.
Indonesia’s occupation was brutal. An estimated 200,000 Timorese lost their
lives to fighting, disease, or famine. In 1996, the Nobel Peace Prize was awarded
to two Timorese leaders, Bishop Carlos Filipe Ximenes Belo and José Ramos -
Horta, drawing attention to Indonesia’s human rights abuses. After Indonesia’s
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