Sovereign wealth funds (SWFs) are investment funds for government money. Essentially, these are for countries that get huge amounts of capital surpluses, such as China.

Interestingly enough, SWFs are running into some problems as asset values have fallen across the globe. A report from the Monitor Company Group indicates that these funds suffered losses of roughly $67 billion in the past year.

At the same time, there has been a reduction in capital infusions, primarily because of the drop in oil prices.

Traditionally, sovereign wealth funds (SWFs) have focused on highly liquid investments, such as equities and bonds. But as these funds get bigger and bigger, the focus has been changing. In fact, some SWFs are moving into alternative investments and even buying up whole companies.

Take Dubai World, which is the emirate's SWF. This week, the firm teamed up with OAO Roskommunenergo (a Russian energy player) to bid $5.34 billion for OGK-1, which is a major electricity provider in Russia.

It's a savvy move. After all, Russia is in the process of deregulating the electricity market, which should come into effect by 2011. So there should be some pricing opportunities (keep in mind that prices have been held artificially low for decades).

Even so, OGK-1 has its challenges. Essentially, the company needs some serious capital infusions. But hey, that's something Dubai World can deal with handily, right?

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Lehman Brothers Holdings (NYSE: LEH) has approached a Korean sovereign wealth fund (SWF) about investing. But Lehman probably won't get the money it seeks. Reuters reports that Korean Investment Corp (KIC), an SWF that manages about $20 billion and is an investor in Merrill Lynch (NYSE: MER), is unlikely to invest in Lehman.

Meanwhile, Bloomberg reports that investors on the Einhorn side of Lehman -- those hoping its stock will drop -- are increasing their wager. It notes that options traders increased their bearish positions to a two-month high yesterday. With one analyst expecting Lehman to report a second-quarter loss of 50 cents a share during the week of June 16, put option volume rose to 283,676 contracts, or quadruple the 20-day average, and bearish bets on the company exceeded bullish ones by 1.6-to-1.

As I mentioned during my talk at Stanford in April, SWFs have been burned by their investments in the U.S. finance industry. One of them, the Citic Group, was lucky it was able to bail out of its commitment to invest $1 billion in Bear Stearns. But that close call is likely to keep other SWFs from throwing good money after bad.