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What If Norway’s Sovereign Fund Replicated the Yale Endowment Model

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checkmate

Sovereign wealth funds are known for their long-term investment horizon and preference toward harvesting the illiquidity premium. Many wealth funds are engaged in co-investments and direct investments such as the Abu Dhabi Investment Authority (ADIA) and Singapore’s GIC Private Limited. However, some sovereign funds are restricted to a smaller universe of asset classes. What if Norway’s sovereign wealth fund were able to generate the returns of the Yale Investment Office? How big would the sovereign wealth fund be today?

Norway’s Government Pension Fund Global (GPFG) has major allocations to fixed income and equities and a sliver to overseas institutional real estate. The Yale endowment model is copied by a plethora of sovereign funds, endowments and pensions, focusing on a high allocation to illiquid investments. Who wins? Keep in mind, Yale manages around US$ 26 billion in assets versus Norway’s SWF US$ 880 billion plus. Finding enough high-quality illiquid opportunities may be impossible for the Norwegian asset giant.

Under the assumptions below, ceteris paribus, Norway’s wealth fund would have US$ 2.515 trillion on June 30, 2015 versus US$ 873 billion.

Calculation and Methodology

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Youtube is Crashing

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Youtube, a video service of Google, is crashing. Institutional investors are major investors in Alphabet, the parent company of Google.

At 6:41 PM on October 16, 2018, Team YouTube tweeted, “Thanks for your reports about YouTube, YouTube TV and YouTube Music access issues. We’re working on resolving this and will let you know once fixed. We apologize for any inconvenience this may cause and will keep you updated.”

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Investors Eye Tencent’s Next Moves

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Formed in Shenzhen in 1998, Chinese tech giant Tencent Holdings Limited is the largest gaming company in the world and the largest gaming market is in China. In August 2018, China’s Education Ministry disclosed its monitoring how many new games are coming online. Tencent needs approval from the Chinese government to publish games. In 2017, almost 9,000 games were approved in China compared to only 1,931 in 2018. Chinese President Xi Jinping is keen on combating shortsightedness in children from the overuse of video games.

Anime

Tencent will inject US$ $317.6 million into Chinese streaming site Bilibili in return for 12.3 % equity in the company. Bilibili is a video sharing site known for streaming anime, comics, and games. Tencent’s investment follows previous funding rounds from Tiger Global Management, Wells Fargo, JPMorgan Chase, BlackRock, and Alkeon Capital Management. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Ireland Strategic Investment Fund Signs MoU with IFC

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The International Finance Corporation (IFC) and the Ireland Strategic Investment Fund (ISIF) inked a Memorandum of Understanding (MoU) that will initially focus on investment opportunities in the food and agriculture sector, given its strength and importance for the Irish economy. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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