Norway’s $880 billion Government Pension Fund Global, Oslo, the world’s largest sovereign wealth fund, said traditional global indexes are no longer an appropriate model on which to base its investments.
A new framework for the management of the fund may facilitate a development where we as the management take greater responsibility by defining a tailor-made reference portfolio,” Yngve Slyngstad, the fund’s CEO, said in a speech in Oslo. The global indexes the fund currently follows don’t “represent the best starting point,” Mr. Slyngstad said.
The sovereign wealth fund, which gets its capital from Norway’s oil and gas wealth, is seeking to boost returns and expand into new asset classes. After getting its first capital infusion 18 years ago, the fund has steadily added risk, expanding into stocks in 1998, emerging markets in 2000 and real estate in 2011 to safeguard the wealth of Western Europe’s largest oil exporter.
The fund, which owns 1.3% of the world’s stocks, has missed a 4% real-return target since it started investing in the late 1990s. Since the establishment of Norges Bank Investment Management in 1998, the fund has had a real annual return of 3.75% and a nominal return of 5.83%, on average.
P&I