Bob Davis has got his hands on a leaked paper by the Milken Institute’s Christopher Balding, in which Balding claims that sovereign wealth funds might not have as much money as everybody seems to think that they have.
Without seeing the paper it’s hard to judge it, but it seems that Balding is relying on official US Treasury data for the size of sovereign wealth holdings. And as Brad Setser has repeatedly shown, that data massively understates the real amount of wealth at play. Specifically, it excludes all the monies that sovereign wealth funds have outsourced to banks and fund managers.
The Milken Institute says that it’s sent the paper out for peer review; when a final version comes out, this large possible problem with it might well be fixed. But for the time being it’s still reasonably safe to assume that sovereign wealth funds really do have trillions of dollars in assets, and not just the few hundred billion that Balding has found in the Treasury data.