Officials from the IMF sifting through the voluminous evidence presented to them by the world's sovereign wealth funds (SWFs) at their recent meetings in Singapore should take a break, sit down with a cool drink, and spend a while perusing the latest research from Deutsche Bank on the subject. It could save them a lot of time and mental effort as they struggle to understand SWF motives in preparation for the "code of ethics" they hope to be ready to present in October.

Entitled "How to Send It – Commodity and Non-commodity Sovereign Wealth Funds", the report, prepared by Deutsche Bank with some help from INSEAD and the OECD, cannot be accused of dumbing down.

It is highly theoretical, sometimes almost academic in tone, but nonetheless is essential reading for anybody wishing to understand the motives and behaviour of SWFs, which have assumed a central, but controversial role in the global financial maelstrom.

Cutting through the "economese" language and the development theory argot takes a little effort, but Deutsche's basic argument runs like this: The West has little to fear from SWF investment, but it must understand the basic economic differences between commodity and non-commodity funds if it is to understand their behaviour. There is no place for conspiracy theories, and the risks of doing business with the SWFs are far outweighed by the dangers of shutting the door on them.

The American reaction to SWF investment is neatly summed up by a comment from a US TV presenter earlier this year: "Do we want the communists to own the banks, or the terrorists? I'll take any of it, I guess, because I'm so desperate."

This encapsulates the US fear – increasingly echoed by Europeans – that because of the collapse of asset values in the west the only alternatives are between the vast liquidity pools of the Middle East, which the west perceives as bringing inherent security risks, and the huge reserves of nominally-communist China. This, as Deutsche shows, is a simple but flawed perception.

The essential difference between the different types of SWF in the world today is not "terrorist" or "communist", but between commodity and non-commodity generated funds. Broadly speaking, all the SWFs of the Gulf region fall into the first category, having founded their fortunes on the huge inflows of energy revenue of the past four decades. Norway too is included in this classification, with a $322 billion (Dh1.2trn) fund derived from its prudent farming of revenues from North Sea Oil. Russia is also in this camp, though its dynamics are rather different.

In the other category lie the great financial power-houses of Asia – China (including Hong Kong), Singapore – which have built up SWFs because of their skills as manufacturers and exporters, which has allowed them to accumulate huge reserves of surplus funds, mainly in the form of US dollars and dollar-denominated securities.

Apart from the origin of their fortunes, there is one other crucial difference between oil and non-oil SWFs. Those countries which made their money from export of manufactured goods are generally much more prudent with their cash. They have much higher standards of public and private savings than the oil-producing countries. China, for example, has a genuine savings rate of 25 per cent, while Singapore's is even higher at 35 per cent. Figures for the UAE, home of the biggest SWF Adia, are not available, but Saudi Arabia, Kuwait and Russia all have negative savings rates.

Part of this is the nature of oil economies, which, because they are consuming the proceeds of a depleting natural resource, would have to fully invest their revenue in financial, environmental or human capital to be able to reverse the negative savings trend. This is the economic rationale behind the "curse of resources".

The other characteristic of oil-SWFs is this: they all want to diversify away from dependence on energy revenue. We have seen this most spectacularly in Dubai, where the emirates' strategic direction has largely weaned it off oil dependency, and led to the creation of a dynamic and diversified economy. Other Gulf states are following suit.

But – and here is the conclusive twist to the Deutsche argument – what happens if foreign investment by SWFs is curtailed by protectionist or xenophobic sentiment in those western markets which are the natural and financially attractive outlet for SWF funds? In this scenario it becomes uneconomic for the oil countries to even produce their oil, let alone sell it on the world's markets.

They may as well leave it in the ground as an appreciating asset, on the assumption that sooner or later the west will want it and will pay a higher price for it. The result would be higher oil prices and the global economic shock these produce, which is what we are seeing now to some degree.

The lesson of the Deutsche analysis is this: SWFs behave in a perfectly logical manner in economic terms, and there is no conspiracy against the west. But if the USA and Europe blocks the natural flow of investment funds from these countries, it could result in higher energy costs and greater global instability. The IMF, as it prepares its code of ethics, should take note.