Norway’s Sovereign Wealth Fund Reveals its 2023-2025 Strategy Plan
Posted on 12/09/2022
This strategy plan is dubbed, “Norges Bank Investment Management Strategy 25”.
Norway Government Pension Fund Global is run by Norges Bank Investment Management (NBIM), a unit of Norges Bank. During the management of this pension, the sovereign fund’s administration expressed concern; geopolitical risk could become a key factor in the coming years. Furthermore, they raised concern regarding organized cyber-criminals. These Criminals are becoming more specialized, sophisticated, and well-funded. The wealth fund could act as a stabilizer in some financial markets, as they plan to take contrarian bets, in a world of inflation.
In the report, they highlight, “our goal is to achieve the highest possible return.”
The report also touches on the sovereign fund’s attempt to utilize their immense set of market and non-market data. This data will support machine learning and aims to strengthen their investment processes. This is comparable to what the Abu Dhabi Investment Authority (ADIA) and Singapore’s GIC Private Limited are trying to do.
On the ESG front, NBIM will seek to push for mandatory corporate sustainability reporting. In addition, environmental and social due diligence with intent to improve company performance, quality, and availability of ESG data.
Real Estate
What is notable is Norway’s sovereign wealth fund aiming to target a real estate portfolio of 3% to 7% percent of the fund. The portfolio consists of listed and unlisted real estate under a combined strategy. Likely on the lower end, the wealth fund would want to build a US$ 100 billion unlisted real estate portfolio over the time period.
Equities
Norway Government Pension Fund Global, a universal asset owner, owns around 1.3% of all listed stocks. According to the report, central to the management mandate is the benchmark index consisting of 70% equities and 30% fixed income. On the listed equities book, Norway’s SWF will continue to use some external managers in segments and markets where they believe they will enhance returns. In some markets, NBIM also believes external managers will reduce the risk of its investments by avoiding certain companies with problematic business models and weak corporate governance.
