US money managers are looking overseas, where foreign governments, flush with cash and eager to spend it, are becoming increasingly involved in the US economy through investments in major Wall Street firms, real estate, and the stock market, reports the Wall Street Journal. Up to $200 billion annually could be invested, earning managers $8 billion in fees.
But as these government-owned sovereign wealth funds—like the $200 billion China Investment Corp—grow, they also become more selective in choosing managers, looking to regional knowledge and commitments. “You can’t just fly in and fly out,” says one expert. Firms worry it may be a short-lived cash cow as funds begin to develop in-house money management talent.