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Wealth Funds Aren't as Wealthy After All: Report

CNBC.com
Wednesday, 20 May 2009 | 6:29 AM ET

The fall in asset prices brought on by the financial crisis has shrunk the size of sovereign wealth funds belonging to oil-rich countries and Asian exporters, the World Street Journal reported on Wednesday on its Web site.

The funds have lost $57.2 billion on the publicly disclosed investments of $125.7 billion they have made since 2006 because of the downturn, Monitor Group, a Cambridge, Mass., consulting firm, told the newspaper.

Sovereign health funds now have roughly $1.8 trillion in assets, and they are likely to grow to between $5 trillion and $6 trillion in 2012, according to Monitor Group.

That is a far cry from the estimated $3 trillion in assets from a year ago, when Western governments expressed fears that they could become tools of economic dominance for the countries that own them, the Wall Street Journal noted.

The fall in asset and commodities prices is to blame for this difference, but also the fact that the funds' assets were overestimated, as many of them do not disclose enough about their size or investments, the paper wrote.

For example, last year, Monitor and others reported that the Abu Dhabi Investment Authority had assets of $875 billion while this year, Monitor puts ADIA's assets at $282 billion, it said.

Last year, Sheikh Khalifa bin Zayed al Nahyan, the ruler of Abu Dhabi, told a Lebanese newspaper that reports that ADIA had more than $800 billion "are exaggerated and they do not reflect the truth and the size of emirate investments abroad."

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