Too much money. Once you pass a certain amount of money, it is very hard to diversify because you are such a large share of the market. I am not exactly sure wh

Too much money. Once you pass a certain amount of money, it is very hard to diversify because you are such a large share of the market. I am not exactly sure where this number lies nowadays but once you pass $10bn or so, you can't own much outside the S&P500 without running into liquidity problems. The only market with infinite liquidity is US Treasuries (that is where the Chinese put their $3trn of foreign currency reserves). Mortgage-backed were liquid until GFC, and liquidity in corporates is falling because dealers can't carry inventory (afaik, not expert...MBS pre-GFC was ultra liquid for sure though and seen as an alternative to USTs). The Saudis own $150bn here (and growing because of Trump/MBS relationship apparently) but I think the issue the Saudis have is that they have a fucking huge budget deficit. There are tons of people on do-nothing, civil servant jobs (mainly royal family members), they have to spend a ton on defence (ostensibly against external threat but the royal family is terrified of an uprising too), and they spend a ton on welfare to buy popularity. They are definitely investing for a return.