A common lament about sovereign wealth funds is their lack of transparency -- no one knows their investment strategy. The chart below -- cribbed from a Standard Chartered report summarized by the FT's Martin Wolf -- makes this visually clear:

I tend to agree with this assessment. But I did find this Wall Street Journal op-ed by Heidi Crebo-Rediker and Douglas Rediker to be counterintuitively interesting on this point -- transparency on SWFs would have domestic effects within these countries as well:

When even the most secretive sovereign wealth fund makes an investment, it must comply with the disclosure obligations of the countries in which it is investing. So, when the newly formed China Investment Corporation bought into Blackstone last summer, it was compelled to disclose the terms of the deal and other material information as part of Blackstone's regulatory filings in the U.S. That turned out to have some very real consequences back home.

Soon after CIC invested in Blackstone, the holding lost nearly $1 billion in less than a month. Chinese citizens immediately let their political leaders know how they felt about their country's savings being squandered by flooding the Internet and other media outlets with angry criticism.

When it emerged that China Development Bank, having already lost another cool billion in its investment in Britain's Barclays Bank, was considering pouring $2 billion into Citigroup as part of the American lender's January rescue package, Chinese politicians quietly killed the deal. While no official explanation was given, China experts believe that the State Council's rejection of the CDB-Citi investment was driven by fear of taking another highly visible loss and the desire to avoid the resulting political backlash at home. It is not just the public grumbling that was noteworthy, but that Chinese political leaders heard it and apparently reacted.

And it is not just China. Following the flurry of sovereign investment in Western banks over the last several months, people world-wide expressed real concerns, alarmed about foreign government shareholdings in the fragile international banking system....

As was the case with China, Singapore and Kuwait, investing globally in our markets has already piqued the interest of those who stand to benefit from those investment decisions. It is likely that increased disclosure of a sovereign wealth fund's attempt to invest for the "wrong" reasons would engender criticism not just from the West, but from those with the most to lose. This could begin to break down the distinctions between "the state" and "the people."

The idea that undemocratic governments might consider the voices of their own citizens regarding how their money will be invested may be one of the most underappreciated benefits of sovereign funds' disclosure. It may also be one of the most effective.