11/04/2011
By Matt Ritchie
Norway’s Minister of Finance Sigbjørn Johnsen has delivered the annual report on the management of Norway’s Pension Fund Global (GPFG) to Parliament, stating the management of the fund has been “highly successful” so far and that the Ministry is “well satisfied” with the results achieved last year.
The total market value of the GPFG increased by NOK 437 billion in 2010, to NOK 3,077 billion (USD $525 billion).
The report attributes the increase to transfers to the fund of NOK 185 billion, and return on the fund’s investments of NOK 264 billion.
A strengthening of the Norwegian krone reduced the value of the fund’s investments by NOK 8 billion, though in a statement announcing the release of the report the Government said the fall had not affected the fund’s international purchasing power.
Management costs totalled NOK 3 billion in 2010.
Johnsen said the returns over 2010 were good, and that the overall losses sustained during the financial crisis have been “more than compensated” by the gains made in the subsequent up-turn.
“One important reason is that we held on firmly to the long-term investment strategy.
“A broad parliamentary basis for important elements of the management of our mutual savings is a pre-requisite for safe management in the long-run. It is important that one succeeds in maintaining a long-term strategy, especially when the markets are uncertain,” he said.
Current projections indicate the GPFG might double by 2020. The investment strategy will also be gradually changing through this period. A portfolio of property investments is in the process of being established, though the fund is proposing to steer clear of private equity.
“In the report there is a discussion about whether the GPFG should be invested in private equity and infrastructure. There is also a broad review of the fund’s regional allocations and bond investments. The perspectives this report provides constitute a good basis for the Storting [Norwegian Parliament] to discuss the development of the fund’s investment strategy in a broader context,” said the finance minister.
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