- Advertisement -

Related

Norway’s SPU Wealth Fund Urged to Increase Equity Share to 75%

- Advertisement -

Stockholm (HedgeNordic) – Norway’s Central Bank last week proposed to increase the amount that the Norwegian sovereign wealth fund, the Government Pension Fund Global (Statens Pensjonsfund Utland – SPU), invests in equities.

The fund (formerly the Petroleum Fund) invests Norway’s excess oil revenues in international stocks and bonds on behalf of the country’s future pensioners and, with an average holding of 1% in equities worldwide, is the world’s largest sovereign wealth fund by assets, currently valued at USD 859 billion.

The Central Bank, whose subsidiary NBIM (Norges Bank Investment Management) manages the fund, has concluded that stocks offer greater potential returns than bonds.

“In February, Norges Bank was requested to assess whether the relationship between expected return and risk for equities and bonds has changed and whether there is a reason to adjust the equity share in the fund’s benchmark index,” Egil Matsen, Deputy Governor of Norges Bank, said last Thursday in Oslo. This assessment found that investment-grade bonds have fallen sharply, while expected returns on equities over bonds are now projected to be at a higher level than at the previous assessment of equity allocation.

“Norges Bank submitted its advice to the Ministry of Finance… recommending an increase in the equity share to 75%,” Mr. Matsen said. A higher equity allocation means the expected return on the fund will increase, the bank said.

Previously wholly invested in government bonds, the investment portfolio first included equities in 1998, with the strategic equity share set at 40%. This level was increased to 60% in 2007. The fund has been composed of 60% equities and up to 5% real estate, with the remainder in bonds, since 2010.

“There is reduced covariance between bond and equity returns. In short, bonds have become a better, but also more costly, hedge against fluctuations in the fund’s value. Both of these factors suggest that some increase in the equity allocation would be appropriate,” Mr. Matsen said.

 

Picture: (c) shutterstock.com—Ioannis-Pantzi

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Glenn Leaper, PhD
Glenn Leaper, PhD
Glenn W. Leaper, Associate Editor and Political Risk Analyst with Nordic Business Media AB, completed his Ph.D. in Politics and Critical Theory from Royal Holloway, University of London in 2015. He is involved with a number of initiatives, including political research, communications consulting (speechwriting), journalism and writing his post-doctoral book. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in English and a BA in International Relations.

Latest Articles

Hedge Funds Surge in April to Post Strongest Gains Since 2020

Global hedge funds posted one of their strongest monthly performances in more than a decade in April 2026, rebounding sharply from the March selloff...

Nordic Wealth Manager Targets €50-75m Hedge Fund Allocation

A Scandinavian-based wealth manager is seeking to allocate €50-75 million to a liquid alternative strategy. According to a request for proposal (RFP) via Global...

Brittle Peace, Fragile Trends: CTAs Battle April Volatility

In April, the NHX CTA Index delivered a positive return despite multiple trend reversals following the fragile ceasefire between the U.S. and Iran. Performance...

The Illusion of Longevity: Why Averages Mislead in Hedge Fund Survival

Longevity is not a defining feature of the hedge fund industry. Wide performance dispersion, impatient capital, and a high fixed-cost base create a fragile...

Elo’s Slow-Moving Hedge Fund Portfolio Built Around Access

Soon after Kari Vatanen joined Finnish pension insurer Elo as Head of Asset Allocation and Alternatives, he praised the team behind the firm’s hedge...

The New Coda: From Intuition to a Unified Investment Process

Peter Andersland is best known in the Nordic hedge fund space as the co-founder of Sector Asset Management, where he remains a shareholder. While...

Allocator Interviews

In-Depth: Diversification

- Advertisement -

Voices

Request for Proposal

- Advertisement -