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Trump Rally Helps Norway Wealth Fund Score $53 Billion

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After a volatile beginning for many large asset owners in 2016, the election of a pro-business politician in the United States has positively impacted global equity markets, lifting annual returns for many institutional investors exposed to public equities.

Yngve Slyngstad

Yngve Slyngstad

Norway’s Government Pension Fund Global (GPFG) benefited from the Donald Trump rally, posting a 6.92% return for calendar year 2016. GPFG took home 447 billion NOK (US$ 53 billion) in 2016. Post-election, U.S. stocks have shot upwards hoping for deregulation and major tax reform in a Republican-dominated U.S. government. The European wealth fund had 37.4% of its listed equity investments in the United States, generating a 15.5% U.S. equity return in international currency for 2016, beating out Australia, France, Sweden, United Kingdom, Germany and China. Overall, listed equities were a driver for positive returns, posting 8.72% for the year. Key contributors for GPFG in equities were Royal Dutch Shell Plc, Glencore Plc and U.S. technology mammoth Apple Inc.

Norway GPFG Profile

The wealth fund decreased exposure to Europe from 38.1% in 2015 to 36% in 2016, while increasing allocation to North America to 42.3% from 40%. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

GIC Sells Arizona Biltmore to Blackstone

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Blackstone Real Estate Advisors, part of the Blackstone Group, acquired the 740-room Arizona Biltmore hotel, located in Phoenix, for US$ 403.4 million. The deal closed on April 20, 2018.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Mubadala Acquires Stake in Growing Hedge Fund Phoenician Capital

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Mubadala Investment Company, through its unit Mubadala Capital, purchased a minority stake Phoenician Capital, LLC. Although terms and size of the deal were not disclosed, the agreement grants Mubadala Capital rights to invest in a fund managed by the New York-based firm, which generated respective returns of 40.8% and 33.0% in 2016 and 2017, against benchmarks of 12.0% and 21.8% for the S&P 500. The hedge fund runs the Phoenician Offshore Fund Ltd.

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Large Asset Managers Continue to Move Operations Out of California

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In the 2010s, Fisher Investments, an investment firm run by Ken Fisher, moved a large number of employees from the Woodside and San Mateo campuses to a town called Camas in Washington, near Portland. Vanguard has a large operational presence in Arizona, while Charles Schwab Corporation has expanded its technology operations and client services in places like Denver, Dallas, Austin and Phoenix. Dimensional Fund Advisors moved its headquarters in 2008 from Santa Monica, California to Austin.

While asset managers reap profits and try to lower employee head count costs, looking to fly-over country seems appealing.

The Pacific Investment Management Company (PIMCO), part of the Allianz family, selected Austin, Texas as its new office to hire more client services and technology talent. The PIMCO Austin office will open later in 2018. PIMCO is headquartered in Newport Beach, California, with an office in New York City.

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