Gulf Arab governments' funds are billions of dollars poorer despite record oil prices because of losses in stocks and other investments, according to a report by the Council on Foreign Relations.
The paper also suggests that the world's largest such fund is considerably smaller than some earlier estimates have claimed.
Holdings of that fund, the Abu Dhabi Investment Authority, and another pool of money controlled by the Persian Gulf emirate together shed more than a quarter of their value last year, the report shows.
An ADIA spokesman declined to comment.
The paper, an advance copy of which was obtained by The Associated Press, estimates that the six members of the energy-producing Gulf Cooperation Council saw their holdings shrink by $82 billion to $1.2 trillion in 2008. The trend could continue.
"All these funds now look likely to shrink in 2009, as the price of oil has fallen to the point where many Gulf economies will need to draw on their foreign assets to sustain their current level of imports," authors Brad Setser and Rachel Ziemba wrote. "Estimates of the Gulf's current and future external wealth consequently need to be scaled back."
The declines came even as the group - which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates - pulled in some $300b. in oil profits, the report estimates.
That is about $70b. more than they collected in 2007, when oil prices averaged around $70 a barrel rather than nearly $100 as they did last year.
The UAE's Abu Dhabi-based funds appear to be the biggest losers. Setser and Ziemba estimate that ADIA and a far smaller fund created to focus on domestic investments held a combined $328b. at the end of 2008 - a considerable decline from the estimated $453b. they held a year earlier.
Some widely quoted estimates over the past year and a half have valued ADIA's holdings at up to $875b., making it by far the world's biggest sovereign wealth fund.
The emirate's ruler, who is also president of the UAE, has sought to downplay such figures, however, telling a Lebanese newspaper last year that such estimates were exaggerated.
The authors of the study agree.
"Published estimates that ADIA... managed almost $900 billion before the recent market slump almost certainly overstate ADIA's true size," they wrote.
Sovereign wealth funds drew increased scrutiny as their holdings - until recently - ballooned on the back of rising energy prices and investment returns. A number of funds from the Gulf and elsewhere stepped in to help ailing banks as the financial crisis picked up steam.
ADIA, for example, agreed to pump $7.5b. into Citigroup Inc. in November 2007. The Kuwait Investment Authority took large stakes in Citi and Merrill Lynch & Co. Inc.
Citi is now dismantling itself. Its shares are trading about 80 percent below where they were when ADIA made its investment. Merrill agreed to sell itself to Bank of America Corp. in September for a fraction of the value it was worth when Kuwait took a stake.
Determining the true value of sovereign funds is difficult because they disclose few details of their holdings.
Setser and Ziemba acknowledge that their calculations - based on estimates of oil revenue and portfolio holdings - could be off because of the lack of transparency.
They note, however, that their findings are in line with losses for other large investors, such as Norway's government pension fund and Harvard University's endowment.
"It is hard to see how the Gulf sovereign funds avoided similar losses," they wrote.