Summary
Sovereign Wealth Funds (SWF) have a lot of money. So they can buy advice. What they do with it is another matter. Investing in Blackstone was investing in a reputable firm at a bad time. So short term the investment looks bad. Long term is the the time horizon of SWF and in the longer term it may turn out fine.
Analysis
Central banks want safety, liquidity and then yield. SWF invesments are in essence aimed more at long term yield considerations because they represent excess reserves - those that are not needed for liquidity purposes by the sovereign governmental authorities. Based on individual country philosophy, these SWF can be invested in stock, bonds and alternative investments. Secrecy is a essential element of how SWFs operate as a general matter. They are relationship oriented and concerend about secrecy even from their own people as the idea is to presereve capiital for the long term rather than encourage the country's public to over spend, which could be bad for many reasons including being inflationary.
Does that mean SWF are dumb money? Far from it. Look at GIC and Temasek, two of the more successful SWFs of long standing. KIA in Kuwait is another long standing SWF which has been successful. CIC is newer and may have teething problems, but they and others have what it takes to get good advice - money. And they are doing so. Do not think they will buy low and sell high. Why do you think Bear Stearns failed to get CIC overture to lead to an investment? Chinese love to gamble but their SWFs are not gamblers.
