Norway state fund rejects real estate before 2007

Related Categories

REAL ESTATE - The Norwegian finance ministry says moving into real estate "just isn't a priority" for the Government Pension Fund, despite reports of an imminent 8-10% allocation.

A spokeswoman for Norges Bank Investment Management (NBIM), which runs the €188bn fund, described as "pure invention" a claim made last week in daily Aftenposten that it would put $50bn into property. 

"It's based on what the journalist thought he would do, rather than what we would recommend," she said.

A further report on an FT website suggested that the budget to be published on October 6 would include proposals for real estate. In fact, no decision on property will be published until the spring, according to Michael Skancke, director-general of asset management at the finance ministry, which determines the fund strategy.

The fund, the former Petroleum Fund, has made little secret of its support for diversification - though probably more modest than the mooted 10% - into real estate. The spokeswoman said NBIM had already written to the finance ministry recommending that it consider other asset classes. 

The ministry said it would also consult its "in-house people" and its six-strong ad hoc expert panel before making a decision. It will publish their advice with its decision.

More pressing for Skancke is the fact that the fund is underweight in equities, which make up just 40% of the fund, against 60% fixed income.

Political pressure for ethical equities was one of the reasons for a review of the equities allocation, he said.

In recent months, the finance ministry has come under scrutiny for its equities screening process, described by US ambassador Benson K Whitney as disproportionately skewed against US companies (IPE, 8 September 2006).

"We've had the same share in equities since 1998," said Skancke. "In that time, the fund has grown and so has our practical fund management experience."


Have your say

You must sign in to make a comment