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Winning Traits for Sovereign Wealth Investors

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Sovereign wealth funds and other long-term public investors can better the odds of generating high returns by analyzing successful peers and their traits. Many times, sovereign investors can be pulled into bad or lackluster investments by various forces. This is common for U.S. public pension funds as many board members are political appointees. One major trend that many public investors are embracing is the growth of real assets to an investment portfolio. Increasingly, more sovereign wealth funds have grown allocation to real assets such as properties, inflation-protected bonds, timberland, and infrastructure. Real estate is the oldest asset class on Earth. It is tangible, real, and property markets offer a level of protection against inflationary pressures. With Occidental nations printing money offering low yields to investors, many governmental investors are looking for stable cash flowing real estate properties in prime markets. Patient capital is happy to invest in property markets for the medium to long-term. By the end of 2011, the Hong Kong Monetary Authority’s (HKMA) Exchange Fund had HK$ 4.4 invested in institutional real estate. The HKMA engaged with real estate investment managers to seek core real estate assets in major international cities. The HKMA has purchased several key properties overseas with an average rent yield of 5 to 6%.

Even reserve managers are serious about real estate investing; these managers come from central banks which are typically very conservative in their investment selections.

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Japan’s GPIF Awards Nissay Asset Management with ESG Disclosure Mandate

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Increasingly asset owners across the Asia-Pacific region are studying the impacts of environmental, social, and governance factors on listed companies. As more Japanese pensions augment asset allocation to listed equities, the importance of corporate non-financial disclosures and practices becomes clear. These disclosures can have a material impression on company stock prices. In addition, Japanʼs Stewardship Code and Corporate Governance Code in 2014 and 2015 were launched, respectively. These codes helped the (environmental, social, and governance) ESG concept gain momentum in Japan.

Japan’s Government Pension Investment Fund (GPIF), the largest public pension fund in the world, awarded a research mandate to Nissay Asset Management Corporation. The mandate entails studying ESG disclosures. The study will conduct a comparable analysis on ESG standards and practices, while taking into account input from both investors and companies. With around US$ 110.5 billion in assets under management, Nissay Asset Management is owned by Japanese life insurance giant Nippon Life Insurance Company.

As GPIF boosted its allocation to domestic equities, the asset owner took a deeper look into the impact of ESG on equity investing. GPIF is keen on improving efficiencies in Japan’s capital markets. GPIF is a universal owner of stocks, similar in some aspects to what Norway’s Government Pension Fund Global (GPFG) does.

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Norges Bank Real Estate Management Buys Central Paris Property

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Norges Bank Real Estate Management, the real estate unit of Norges Bank Investment Management (oversees Norway Global Pension Fund Global), has signed an agreement to acquire a 100 percent interest in an office property located on 54-56 rue la Boétie in central Paris.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Schlumberger Gets Closer to Eurasia Drilling Company

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Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and American oilfield services giant Schlumberger (SLB) have planned a deal to invest in Russia’s Eurasia Drilling Company Limited. RDIF CEO Kirill Dmitriev made the announcement. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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