Norway's $860 billion oil fund needs study before buying new types of assets: minister

Reuters News
Posted: Apr 04, 2014 6:57 AM

OSLO (Reuters) - Norway's $860 billion oil fund, the world's biggest sovereign wealth fund, is not ready to invest in new types of assets and needs a year to study whether to buy infrastructure or unlisted assets, Finance Minister Siv Jensen said on Monday.

She said the fund needed to see how its small but growing real estate portfolio functions and what the risk of more active management would be.

"We are in a learning process on building up in real estate ... and that's the portfolio we're actually discussing with broadening in the (unlisted) sector," Jensen told reporters.

The fund, which invests Norway's oil revenues, is one of the biggest investors in the world, holding about 1 percent of all global shares. Many investors watch its investment decisions keenly as a result.

Jensen unveiled a series of reforms last Friday but did not recommend new types of assets on top of its listed stocks, bonds and real estate portfolio, disappointing some critics.

The central bank, which manages the fund, earlier this year said the fund needs to take on greater risk because the current framework is unlikely to yield the 4 percent long-term return expected by the government.

"There is a great consensus that a (bigger) active portfolio represents more risk and that's something we need to look into before we conclude," Jensen said.

"If we are to broaden the active portfolio, it will be natural to discuss infrastructure and other means as well, ... this is something we will come back to in the (white) paper next year," she added.

The real estate portfolio is still just 1 percent of the fund, short of the 5 percent limit, and the central bank has been building up expertise for years to handle this new portfolio.

As part of its active management program, the fund holds meetings with companies where it wants change and actively pushes its proposals with the board and management.

(Reporting by Balazs Koranyi Editing by Jeremy Gaunt)