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Norwegian oil fund gives grants for portfolio, engaged ownership research

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Norway’s sovereign wealth fund has awarded two research grants, one for a project on portfolio choice for long-term investors and another for an investigation of the effectiveness of engaged ownership.

The grants are for three years and were awarded as part of the Norwegian Finance Initiative’s (NFI) research programme.

US-based National Bureau of Economic Research (NBER) has been granted funding to carry out a series of research conferences on topics within long-term asset management. 

Norges Bank Investment Management, which manages the Norwegian oil fund, said the NBER’s project would “support and disseminate research on central challenges facing long-term investors”.

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Examples include “portfolio choice in the presence of a time-varying investment opportunity set” and “the measurement of liquidity and optimal portfolio selection in the presence of differentially liquid assets”.

The project will be led by Monika Piazzesi of NBER Research Associates; Joan Kenney, professor of economics at Stanford University; and Luis Viceira, George E Bates professor at Harvard Business School.

Several aspects of the Government Pension Fund Global’s (GPFG) asset allocation are under review at the moment, but IPE understands that there is no direct link between this and the NBER project.

The Norwegian government recently commissioned a review of the GPFG’s equity exposure, and it has before been urged to expand the fund’s remit to include infrastructure and a potential higher exposure to real estate.

Effectiveness of engaged ownership 

A second funded project, to be carried out by London Business School (LBS), will investigate the effectiveness of engaged ownership.

This will be done by analysing “the extent, impact and value of engaged ownership” by Standard Life Investments (SLI).

Professors Marco Becht of the Université libre de Bruxelles, Julian Franks of LBS and Hannes Wagner of Bocconi University, Milan, will run the research, which will study the private and public actions of SLI based on data from 2004-14.

SLI is understood to have been chosen because it is a leader in corporate governance and stewardship matters and has a wealth of data to which the researchers were given access.

Norway’s oil fund is an active owner, and the LBS project is understood to tie in with its interest in moving to more data-focused research into engaged ownership and environmental, social and governance (ESG) investment considerations.

NBIM said the NFI research programme reflected Norges Bank’s “long-term commitment to strengthen the scientific foundation of the management of the fund”.

Under the programme, Norges Bank is currently inviting submissions of research proposals on the financial economics of climate change.

The deadline is 31 March.

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