SwFs: Wealth Smaller Than Thought

Ashby Monk

Nadim Kawach has an article out this morning that highlights the extent to which the size of SWFs has been exagerated over the past few years. This is, in part, due to the fact that many SWFs are still not transparent, which leaves analysts with the unpleasant task of (informed) guessing as to how much these funds actually manage. According to the article, which quotes an adviser at the Saudi Ministry of Petroleum and Mineral Resources, the assumptions that go into this guessing-game are oftentimes faulty:

“These projections are highly exaggerated as they were based on exaggerated estimates of present assets and on unrealistic assumptions about oil prices, the capacity of economies which own those funds, the return on those investments [5.5 per cent annually] and other illogical projections.”

So how big are these funds? The article seems to suggest that rather than the $12 trillion projections for the next few years (2015), a better assumption is something in the range of $2 trillion (for 2012). That’s a big difference that can’t be explained by the three year gap! Alas, the latter is probably the more accurate assessment, as it is in line with the Setser-Ziemba calculation from August, which pegged SWFs at around $1.5 trillion.

So, the W in SWF isn’t quite as big as we thought. Even still, I’m confident that SwFs will still be important players in financial markets. At least I hope so…my research depends on it!

2 Responses to “SwFs: Wealth Smaller Than Thought”

  1. 1 Victoria Barbary September 29, 2009 at 10:43 am

    Although International Financial Services London reckon that SWFs increased in value in 2008 by 18% to reach $3.9 trillion in a new report out today (available at http://www.ifsl.org.uk//output/PressReleaseItem.aspx?NewsID=315, see page 4).

    I’d like to say I believe that, but I don’t. If they were worth that amount by December 2008, because “The losses SWFs incurred on some of their investments during the year were more than offset by inflows of new funds”, it seems inaccurate now. I’ve been putting the tail on my donkey at about $1.5-2 billion for a while. But then again it depends what you define as a SWF…

  2. 2 Ashby Monk September 29, 2009 at 5:08 pm

    Interesting. I saw the IFSL report. It struck me as odd that we could have figures so different. But as you say, what do we include as SWFs? Thanks for the comment…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s


This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

RSS Feed


Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 370 other followers

Latest SWF News

Visitors Since August 2010

%d bloggers like this: