Despite new Norwegian legislation allowing investment managers to increase portfolio equity weightings by 15%, the country's pension funds are finding it difficult to profit from the opportunity. The regulations brought in by financial regulator, the 'Kredittilsynet', mean funds can lift their domestic equity quota from 20% to 35%.
Total foreign investment in Norway is restricted to 20%.
However, due to a flat investment market and lack of pension fund liquidity, there has been little movement by funds to exceed the 10-15% of equities already held, says Petter Solvang, sales manager of Berg Fondsforvaltning Asset Management, part of the Alfred Berg group, which manages 30 Norwegian funds.
Norwegian pension funds want to reduce risk and spread their investments and certainly the new regulation on equity allocation will accelerate this. However, the fundamental problem is a lack of funding, so I think it will take time before we see any noticeable equity portfolio increases.""