Norway’s Finance Ministry has commissioned an independent review of active management at the country’s giant sovereign wealth fund, the first since 2022, and appointed two academics from Norges Handelshøyskole (Norwegian School of Economics, NHH) in Bergen to do the analysis.
The ministry announced the review yesterday of Norges Bank’s active management of the Government Pension Fund Global (GPFG), having conducted regular reviews of the central bank’s active management of the SWF since 2010.
“As part of the review, the ministry has asked an expert group to analyse and assess Norges Bank’s active management of the pension fund,” the ministry said.
“The expert group consists of Professor Trond M. Døskeland and Associate Professor André Wattø Sjuve at the Norwegian School of Economics,” it said, adding that the group would prepare a report that would be published – and that Norges Bank had also been asked for its analyses and assessments.
The letter to Norges Bank, which runs the GPFG via its Norges Bank Investment Management (NBIM) unit, includes six headers for points the bank should address: risk and utilisation of limits; results; investment strategies; real estate management; investment in unlisted infrastructure and renewable energy, and the financing of property and unlisted infrastructure.
The mandate for the expert group includes a certain focus by the ministry on the SWF’s unlisted real estate and infrastructure investments, calling for detailed analysis of their performance in relation not only to the financing used for those investments – the sale of equities or bonds – but also of results against relevant sector benchmarks and the performance of other managers.
“Investments in real estate and unlisted infrastructure are part of the bank’s management that have contributed the most to the deviations from the fund’s benchmark index in recent years,” the ministry said in the mandate.
“It is therefore important to have a good understanding of how these investments and their financing contribute to the fund’s return and risk,” it said.
NBIM’s mandate for management of the GPFG allows it to deviate from its 70/30 equity/bond benchmark by 1.25 percentage points — leeway that was increased in 2016 from a one percentage point limit, but which has been held at the same level for the last nine years.
The launch of this review follows the Norwegian government’s announcement in May of the line up for a new expert council to advise it on managing the GPFG – a panel which will also tackle the question of active management by the index-near fund, among other topics.
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