The intention of this measure was to discourage short-term capital inflow while creating no barriers to other forms of capital movement. Whether such a measure would work in the relatively sophisticated financial markets which we now have in New Zealand is at this stage an open question.
They are set up primarily to insulate the budget and the broader economy from excess volatility, inflation, Dutch disease, etc., by smoothening revenues flowing to the budget i.e. saving during a revenue windfall and dis-saving during a price slump. SWFs seek returns over and above that required to preserve the real value on a sustainable basis.