With NOK22trn (€2trn) of assets, Norway’s sovereign wealth fund is often in the news, but usually because of its equity investments, which make up 72% of the giant portfolio. This month, it was the turn of the bond portfolio, when the fund’s manager NBIM published recommendations for changes that would see a big fall in the allocation to government bonds.
At a time when sovereign bond prices are under pressure in world markets, the idea that around €100bn of government bonds might be sold – albeit gradually – as the Government Pension Fund Global (GPFG) rebalanced its portfolio to more closely resemble today’s bond market mix caught attention, particularly if much of the sell-off was in US Treasuries.
Norwegian academic Espen Henriksen warned such news stories – in the Financial Times, Bloomberg and the Wall Street Journal days after IPE’s story – had the potential to attract “unwanted attention”. Rather than expressing an opinion on potential changes the government should make, it would be better if NBIM limited its advice to professional analyses and described trade-offs, Henriksen suggested.
In Iceland, consolidation in the pension fund sector is continuing apace, with Gildi and Festa reaching an agreement to merge. The fusion, if approved, is set to create the second-largest Icelandic pension fund in assets, and the largest in terms of membership, since the two funds have nearly six times the number of participants of government employee fund LSR, the current number one.
In Sweden, the only Gothenburg-based national pensions buffer fund (AP2) beat its larger Stockholm-based peers, AP3 and AP4, on first-half investment returns, posting a 9.6% gain after costs, compared to 7.6% and 6.8% for the latter two funds, respectively.
Among the winning segments of AP2’s portfolio, its exposure to listed emerging market equities shone particularly with a 51% gain in the period, though the interim report also revealed a write-down of AP2’s previous holding in troubled Swedish green steel firm Stegra.
Items to note:
- Finland’s Ministry of Finance is exploring the idea of a state-funded newborn investment scheme, with a first investment of €300 for every child born. The proposal is out for consultation until 18 September.
- Mats Langensjö, Alfred Slager, Matti Leppälä and Arnaldur Loftsson will be among the speakers at this year’s IPE Iceland event for senior Icelandic pension fund investors on 14 October in Reykjavik.
Rachel Fixsen
Nordic and Netherlands Correspondent
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