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Norway SWF Scales Back Private Properties, Allows Listed Real Estate

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Norges Bank (through Norges Bank Investment Management), which is the ultimate manager of Norway Government Pension Fund Global, penned a letter to Norway’s Ministry of Finance regarding real estate investment strategies. Norges Bank’s executive board adopted main points in real estate investment strategies. First, Norway’s GPFG should target a real estate portfolio of 3% to 5%. The sovereign fund’s property portfolio should comprise both listed and unlisted real estate investments and there is no specific limit for the proportion of listed real estate investments. This is a shift, as listed real estate was originally not included in the fund’s property allocation when the fund decided to carve out a 5% initial allocation to real estate. As stated in the letter, “With a limited portfolio of unlisted real estate and a desire to integrate listed and unlisted real estate, the Executive Board finds that it is no longer appropriate to organise the management of unlisted real estate separately.”

The big winner of this shift is listed real estate vehicles such as real estate investment trusts (REITS).

The real estate portfolio should be broadly diversified, and the strategy shall be simple, with cost considerations and efficiencies being a key weight on decisions. The board also permitted the fund to look at special investment opportunities that may arise in the unlisted real estate market, thus value-add and opportunistic real estate strategies could be considered.

Norges Bank’s executive board decided to shut down Norges Bank Real Estate Management, the separate unit that managed unlisted real estate investments. The real estate unit will be integrated into Norges Bank Investment Management, effective April 1, 2019.

China’s Central Bank Creates Macro-Prudential Management Bureau

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The People’s Bank of China (PBOC) created a new department to oversee and attempt to eliminate financial risks to the system. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Like its U.S. Peers, Legg Mason Seeks to Trim Costs

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Legg Mason Inc., a Baltimore-based asset manager, has announced a reduction in workforce as is prepares to streamline operations and save money. Legg Mason’s leadership commented that assets under management fell 5 % year-on-year. Legg Mason currently manages US$ 727.2 billion (as of December 31, 2018), which is down from the previous US$ 767.2 billion. CEO Joseph A. Sullivan noted that a global operating platform will centralize fund administration, IT, and other departments that work with affiliates. Sullivan did not discuss the number of layoffs expected, or specify which areas would be impacted. Legg Mason disclosed they planned to close a quarter of its exchange-traded funds in March 2019. These three ETFs include a U.S. strategy, emerging markets, and a developed markets strategy outside the U.S. However, these funds run around US$ 28 million in assets under management.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Monetary Authority of Singapore Establishes Corporate Governance Advisory Committee

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On February 12, 2019, the Monetary Authority of Singapore (MAS) revealed the creation of a Corporate Governance Advisory Committee (CGAC). CGAC was formed to advocate for good corporate governance practices among listed companies in Singapore. Bobby Chin, Director of Singapore Telecommunications Limited, will be the Chair of CGAC. According to a MAS press release, “CGAC will identify current and potential risks to the quality of corporate governance in Singapore.”

MAS formed the Corporate Governance Council (Council) in February 2017. The Council was dissolved after it pushed out a publication of its final recommendations on August 6, 2018.

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