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Impact Investing

IPE special report May 2018

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Petroleum Fund prefers “security-specific” risk

NORWAY – The 78.7 billion euro Petroleum Fund says it prefers to take risks at the level of individual securities rather than at the macro level.

“We prefer to take security-specific risk rather than macro, top-down risk,” the head of Norges Bank Investment Management was quoted as saying in a newspaper interview.

Norges Bank Investment Management runs the fund on behalf of the Norwegian government.

“We do not trade in the old-fashioned way – American bonds against European bonds and so on – but we trade between different American bonds and between European bonds,” Knut Kjaer, the executive director of NBIM was quoted by the Financial Times as saying.

Kjaer was also quoted as saying the fund is set to become more active in the management of the companies in which it has a stake. “We understand it is in our interests to be a more active owner,” Kjaer told the paper.

Earlier this month the Norwegian central bank acknowledged that there are “challenges” involved in managing the fund – and that there are demographic hurdles as well.

The fund, set up in 1990 to transfer Norway’s oil wealth into financial wealth, saw its returns fall 4.7% in 2002.

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