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BIG YEAR: Norway’s SWF Generates 13.66% for 2017

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Norway Government Pension Fund Global returned 13.66%, or 1,028 billion NOK, in 2017. The wealth fund also hit another milestone, surpassing 8 trillion NOK on April 26, 2017. By September 19, 2017, the wealth fund exceeded US$ 1 trillion in assets. Norway’s GPFG returned 19.44% in equities, buoyed by the U.S. stock market. The wealth fund generated 3.31% in fixed income and 7.52% in unlisted real estate. The overall return on the sovereign fund was 0.7 percentage point higher than the return on the benchmark index. The split of assets for Norway’s GPFG on December 31, 2017 was 66.6% was invested in equities, 2.6% in unlisted real estate and 30.8% in fixed income. At the end of the year, the sovereign investor had 876 billion NOK invested in equities and bonds in emerging markets, compared to 775 billion NOK in 2016.

Norway GPFG – 2017 Annual Equity Returns (International Currency)
U.S. – 14.5%
U.K. – 18.0%
Japan – 20.3%
Germany – 25.5%
France – 24.7%
Switzerland – 18.3%
China – 43.4%
Canada – 10.8%
Australia – 15.2%
South Korea – 36.0%

“The fund’s cumulative return since inception has passed 4,000 billion kroner. One out of four kroner return was generated in 2017, after a very strong year for the fund. Again, our equity investments returned strongest with a return close to 20 percent,” says Yngve Slyngstad, CEO of Norges Bank Investment Management, in a press release.

Norway’s GPFG starts out using the FTSE Global All Cap stock index for its equity investments. The wealth fund then starts adding countries into its internal reference portfolio, in which it picks securities, instruments and markets from a broader universe than used for the strategic benchmark index.

More Interesting Points
In 2017, Norway’s GPFG added Malta to its equity universe.

China vs. India
The sovereign fund had 217 billion NOK invested in China at the end of 2017. These investments were spread across 566 companies and 45 bonds.
The sovereign fund had 96 billion NOK invested in India at the end of 2017. These investments were spread across 275 companies and 36 bonds.

Norway’s GPFG had 6.801 billion NOK invested in Saudi Arabia at the end of 2017.

Can Old Mutual Weather the Prolonged Storm?

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South African insurer Old Mutual Ltd.’s earnings are out, and it isn’t a pretty picture. Old Mutual announced that it suffered a 12% drop in adjusted full-year profit. The hoped-for 2018 targets were missed, and their local economy remained anemic. Though Old Mutual is the second biggest insurance company in the country, it was unable to thrive against this sullen backdrop. Old Mutual sought to appease shareholders and potentially benefit from the swoon in the stock price with a US$ 138 million stock buyback. The company has lost nearly a third of its value since listing in Johannesburg less than one year ago. South Africans are not making their premium payments, and currency devaluation made for a difficult year in Zimbabwe. Earnings per share fell to US$ 0.16, down from US$ 0.18 a year earlier, when it was still working to shed its former conglomerate structure. The growth target of gross domestic product growth plus 2% was also missed. Operating profit fell 4% as well. South Africa’s GDP growth was a disappointment at 0.8%.

Norges Bank Investment Management, on behalf of Norway Government Pension Fund Global, is a major institutional shareholder in Old Mutual.

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Upcoming April 2019 Issue of the Sovereign Wealth Quarterly

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Below is the cover of the upcoming April 2019 issue for the Sovereign Wealth Quarterly. Sovereign Wealth Quarterly covers institutional investors such as sovereign wealth funds, pensions, endowments, central banks, and other long-term institutional investors.

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Chinese Stock Picker Raises $10 Billion in Half a Day

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Chen Guangming, a former star portfolio manager at Orient Securities Asset Management Company Limited, started Shanghai-based Foresight Fund. Despite the Chinese stock market crash of 2015 still being an imprinted memory, Foresight Fund ceased receiving client subscriptions in its fund after going well beyond its 6 billion RMB fundraising target. According to news sources, the money was raised in less than half a day. The company allegedly raised more than 70 billion RMB (US$ 10 billion) for its mutual fund called the Ruiyuan Fund. Roughly 20 billion RMB was from China Merchant Bank Company’s fund distribution platform.

Chen Guangming generated big returns at his old employer. Orient Securities Asset Management Company is owned by Orient Securities Co., Ltd., also known as DFZQ. Chen Guangming is the former Chairman of Dongzheng Asset Management and personally oversaw Dongfanghong No. 4. from its inception in 2009 to the end of 2017.

Foresight Fund is cautiously optimistic on China, still seeing growth. In a local news story from Sina, Chen Guangming China’s growth is estimated t be less than 6%, but compares it to the U.S. whose GDP never exceeded 10%, but has experienced high growth in its stock market.

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