Norway Knocks Off Abu Dhabi as World’s Largest SWF

(November 6, 2012) — Norway’s US$656.2 billion sovereign wealth fund (SWF) now has more assets under management than the $627 billion Abu Dhabi Investment Authority (ADIA), making the Norway Pension Fund-Global the world’s largest SWF.

China takes two of the top five spots. Hong Kong’s State Administration of Foreign Exchange Investment Company is third with $567.9 billion, although this is a “best guess estimate” as the fund doesn’t release the figure. The smaller (but more transparent) China Investment Corporation comes in at number five, holding assets worth $482 billion.

Norges Bank Investment Management, which manages the SWF fund, posted fairly strong 4.7% returns for the third quarter of 2012, rising in value by $29 billion. “The result was largely driven by a rally in global stock markets,” said Yngve Slyngstad, chief executive officer of the managing body. “Stocks gained the most in Europe, where the fund has about half of its shareholdings.”

The fund’s equity investments—including allocations to German chemical producer BASF SE and US technology companies Apple Inc. and Google Inc.—returned 6.5% and fixed-income investments returned 2.2%, according to an earnings statement. Investments in real estate returned 2.7%.

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ADIA’s portfolio, in contrast, is much more of a mystery. One rare glimpse of the fund’s investing activities came through the diplomatic cables released in Wikileaks. A 2009 message details Head of Strategy Jean Paul-Villain and another ADIA official’s reluctance to shift out of equities into more secure investments as the financial crisis took hold. ADIA stayed the course, and has reaped profits as the stock market rallied. Furthermore, ADIA avoided the toxic assets that infected the financial system in the run up to the financial crisis by ignoring subprime investments and most corporate debt.

These prudent decisions were not sufficient to keep ADIA in the top spot, however.

Beyond being the largest SWF, Norway’s fund also holds more listed equities than any other single entity on earth. At last count, it held 8,200 companies, which made up 60% of the entire investment portfolio.

All of this being said, ADIA did beat out the Norwegian fund in a much more important ranking:aiCIO’s Power 100. Jean-Paul Villain took second, while Yngve Slyngstad came in at number five.

The 25 Largest Sovereign Wealth Funds Worldwide by Assets Under Management (US$)

SWF

See the Sovereign Wealth Fund Institute’s entire ranking here.

(November 6, 2012) — The roughly $117 billion Ontario Teachers’ Pension Plan (OTPP), Canada’s third-largest retirement fund, is planning to open an office in Hong Kong in 2013 as it aims to bridge its funding shortfall.

However, plans — in terms of size and number of personnel — are uncertain, Bloomberg initially revealed.

The new office speaks to the importance of the region, OTPP spokeswoman Deborah Allen told aiCIO. The office would join OTPP’s New York and London offices outside its Toronto headquarters.

OTPP’s planned first Asian office follows its June acquisition of a 9.9% stake in Kyobo Life Insurance Co., the third-largest insurance company in South Korea, for $400 million. “Kyobo is a leading insurance brand with a strong customer base and financial performance,” said Wayne Kozun, OTPP’s senior vice-president of public equities. “We believe our investment is a unique opportunity to acquire a sizeable stake in the Korean life insurance industry’s most profitable company, and further expand our direct investments in Asia. We look forward to being a constructive partner with Kyobo, its management team and its shareholders.”

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The allure of Asia and emerging markets more broadly for institutional investors is nothing new. In June, for example, Kohlberg Kravis Roberts & Co. won a $225 million commitment from the Oregon Investment Council for the investment firm’s buyout fund investing in Asia.

In May, some of the world’s largest investors began lining up to take advantage of China’s economic upward trajectory and new structure for foreign pension funds to invest in the country’s capital markets. With quotas individually capped at $1 billion under the Qualified Foreign Institutional Investor scheme, the China Securities Journal reported at the time that the country would increase the maximum amount that a foreign financial institution can allocate.