Norway SWF on Path to $1 Trillion in Assets
Norway’s Government Pension Fund Global (GPFG) revealed its second quarter 2017 figures. The wealth fund had surpassed US$ 954 billion in assets at the end of June, on its path toward US$ 1 trillion. For the second quarter of 2017, the fund returned 2.6%, or 202 billion NOK. The listed equity allocation for the fund reached 65.1% and returned 3.4% for the quarter. Norway’s GPFG has permission to go up to 70% in listed equities. In regard to public equities, Norway’s GPFG benefited from its allocation to healthcare stocks which delivered a second quarter return of 5.7%, with industrials at 4.9%. In addition, the wealth fund’s holding of Amazon stock made it to be the eighth largest equity holding for the fund, some 29.705 billion NOK (US$ 3.5 billion).
Norway’s GPFG is also looking into whether private equity would be a meaningful and appropriate asset class for the sovereign fund. Would expanding into additional asset classes make a difference in returns for a sovereign fund that is approaching US$ 1 trillion in assets? The sheer size of the fund could undermine efforts for Norway’s GPFG to diversify into infrastructure and private equity. Norway’s GPFG has experimented with a 5% target allocation toward institutional real estate. It has taken the fund years to build out a portfolio that still dwarfs in size the total fund portfolio value.
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