SWFs: Not So Big and Scary Anymore

May 20, 2009

Bob Davis/Wallstreet Journal

A year ago, Washington and Brussels worried that sovereign wealth funds from oil-rich countries and Asian exporters could become tools of economic dominance. With an estimated $3 trillion in assets — and supposedly on their way rapidly to $10 trillion — they could give the
governments that own them a powerful lift.

That was then. This is now: SWFs have crash landed along with the rest of global capitalism. According to Monitor Group, a Cambridge, Mass., consulting firm, the funds have lost $57.2 billion on the publicly disclosed investments of $125.7 billion they have made since 2006.
Licking their wounds, the funds began to invest mostly at home after the global economy nosedived at the end of last year, Monitor says, not in the U.S. and Europe.

By the way, Monitor notes, the funds aren’t all that they were cracked up to be anyway. They now have roughly $1.8 trillion in assets. And they are likely to grow to between $5 trillion and $6 trillion in 2012, roughly half of what Monitor and others forecast last year.

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