This report is the third in a series of papers on the role of Sovereign Funds (SFs) in the Pacific Islands.

Our first report set the context of Pacific Island SF and their roles and responsibilities (Drew, 2016). Key findings included that many Pacific Island SFs appear to have multiple economic purposes in practice if not in legislation, and that the historical success rate of them meeting these purposes have been quite mixed. The second report provides an assessment framework that contains criteria that can be used to evaluate the practices of Pacific Island SFs (Drew et al., 2016). These criteria align with the Santiago Principles – a set of best-practice principles that was developed by the International Monetary Fund in conjunction with many SFs. Some funds have been broadly successful over a long period, but in others poor governance and investment management, along with a lack of fiscal policy control, have led to very poor fund and fiscal outcomes that have had broader negative repercussion for living standards. This highlights the need for more research and assessments of Pacific Island SFs to better 4 understand their investment processes and how they are meeting their legislative purposes. One of the key elements in Governance of a fund is having well-defined benchmarks. In this paper we motivate notional simple, low cost passive “reference portfolio” benchmarks for the different types of SFs in the Pacific. In follow up research we will consider in more depth three case studies: the Trust Funds of Tuvalu, Niue and Tokelau. These case studies will be prepared as part of in depth reviews of these funds.