This morning, I stared at this fun new SWFI bubble chart for five minutes trying to spot something…anything…that resembled a trend of some sort. But I just didn’t see how to ‘fit a line’ to this data. In other words, I couldn’t see how any of the variables plotted (size, source of capital, transparency, geography, or strategy) related to one another. It all just seems random.
Then it hit me, there’s a fundamental problem with the underlying data: When we move along the x-axis from right to left, the data on the y-axis becomes less and less reliable. In other words, we may know exactly how Norway manages its money, since it is highly transparent. But it is quite difficult for us to say what the funds in the middle and left of the chart are actually doing with their assets. For example, do we really know what SAFE and ADIA are up to? Now, I acknowledge that it would be relatively simple to see if these funds are making strategic investments, as such investments typically find their way into news articles. But are these funds investing their assets actively? (I assume that “active” is somewhere between “passive” and “strategic” on the y-axis.) What percent of their assets are in-house? What do their external mandates look like? For these leftward funds, it’s hard to say.
Anyway, it’s a fun chart. I’m glad they put it together. It’s not SWFI’s fault the data become less reliable as funds grow increasingly secretive.