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Norway Tells Largest Sovereign Wealth Fund to Buy on Dip


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Norway Tells Largest Sovereign Wealth Fund to Buy on Dip

Business

Category: Financial / Investment

The government this month codified that the fund, whichgoes by the official name of the Government Pension Fund Global, has to buy stocks when markets are falling as part of a strategy it calls rebalancing. The process will be triggered when the fund’s stock weighting deviates more than 4 percentage points from its 60 percent mandated level at the end of a month.

“We can stomach buying more equities in falling markets,”Paal Haugerud, head of the Finance Ministry’s asset management unit, said in an Oct. 18 interview in Oslo. “Short-term volatility is of lesser importance for a truly long-term investor.”

The move will open up for the managers of the fund, headed by Chief Executive Officer Yngve Slyngstad, to make more active choices in investing Norway’s oil wealth as the investor struggles to meet its 4 percent return target. The fund argues it can take different risks than other managers since it doesn’t have any immediate obligations and a steady inflow of capital.

Norway is also shifting the fund’s strategy to capture more global growth to safeguard the nation’s wealth. It’s moving asset allocation away from Europe as emerging markets in Asia and South America gain a bigger share of global output.

The Stoxx Europe 600 Index rose 0.6 percent to 271.15 as of 12:46 p.m. in London. The index is up 11 percent this year.

Source: Bloomberg News

Published: September 17, 2019