Anyone who has watched an investment portfolio turn south in the past 19 months might take comfort in the fact that the supposed geniuses running sovereign wealth funds (SWFs) haven’t done any better.
The funds, owned by governments mostly in Asia and the Middle East that grew fat on high oil and commodity prices, have given back $57.2 billion, or 46 percent, of the $125.7 billion in publicly disclosed investments that they have made since 2006, according to the consulting firm Monitor Group, The Wall Street Journal reports.
If you had your money in an S&P index fund, you would have done better than that. The Standard & Poor’s 500 Index lost only 28 percent during the same period. And that return excludes dividends.
A year ago, the SWFs had estimated assets of $1.3 trillion, and some experts predicted the figure would soon reach $10 trillion.
Now Monitor Group says they have only $1.8 trillion in assets and will likely expand to $5 trillion to $6 trillion by 2012.
The investment losses and lower oil prices pushed the numbers down. In addition, hysteria that the funds were on their way to dominating the U.S. economy led some experts to overestimate their size in the first place.
And, to the extent that SWFs did invest in the United States, much of it was money that was sorely needed. Citigroup, Morgan Stanley, and Merrill Lynch (now part of Bank of America) received big infusions of SWF money in 2007 and 2008.
Imagine how big their capital needs would be now if they hadn’t done so.
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