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Norway fund pushes for more active management

NORWAY - The Norwegian Government Pension Fund - Global is looking to hire more staff for its offices in Oslo, New York, Shanghai and London, in a push to widen its scope of active management.

Knut Kjær, exiting executive director and one of the 10 nominees for this year's Outstanding Industry Contribution award at the IPE European Pension Fund Awards in Vienna tonight (Nov 15), told IPE in an interview the fund wants to increase its capabilities to be an active manager.

"Key issues we face are having the best possible staff, the best possible leadership and incentive systems, and strategies that delegate investment authority to experts and use all possible alpha sources in the most efficient way," he outlined.

Kjær, who said it is likely he will be leaving Norway and taking a job in the financial industry elsewhere, said his fund's strategy has seen the fund being able to rebalance even when during times of market turmoil.

The Norwegian government, therefore, recently decided to increase its equity investments from 40% to 60% and the government will debate early next year whether the fund should push into real estate and private equity.

According to industry sources, the fund will start investing in these alternatives by placing 10% in real estate and 5% in private equity by next year.

The Norwegian ministry of finance's move to prioritise taking the equity portion from 40% to 60% has been a crucial decision, says Kjær, adding: "That is much  more important than real estate and private equity together, because when you look at the risk involved and the increase in expected return for the fund, increasing the equity portion by 20% is a much more significant manoeuvre."

Kjær is reluctant at this stage to outline where he will be going next, saying: "I have, of course, some ideas, I need more time to work on some alternatives. It will be within the financial sector in one way or another."

Consultancy company Spencer Stuart is currently supporting the board of Norges Bank Investment Management (NBIM), the fund's investment manager, in its search for his successor.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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