Sovereign Wealth Funds Taste Bitter Losses

So far this year, the funds have seen declines of an estimated 18% to 25% of their assets, which could lead to closer scrutiny in the future
Emirati investors follow the movement of stock prices at the Dubai Financial Market on October 12, 2008. Stock markets in the energy-rich Gulf states opened the week's trading today sharply down with the Dubai Financial Market shedding six percent. MARWAN NAAMANI/AFP/Getty Images

Not long ago the Western world was obsessed with sovereign wealth funds, those fast-growing pools of nationally owned assets fueled by oil money and trade surpluses. The fear was that they and their sometimes controversial owners would gobble up vast troves of trophy assets in the U.S. and elsewhere. But, after a brutal fall in the markets, that threat suddenly looks a lot less real. While the funds are cagey about saying what they actually own—and what they have lost—it's certain that they, like many other investors, have suffered big hits to their portfolios. They also have clearly lost firepower—and possibly some of their appetite for acquisitions.

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