Incoming Norges Bank Chief Nicolai Tangen to Sell Hedge Fund Holdings 

The divestment addresses concerns raised at a parliamentary hearing earlier this month. 


The incoming Norges Bank chief executive, Nicolai Tangen, will divest his holdings in the London-based hedge fund he founded to satisfy conflict of interest concerns around his appointment. He starts in September.

Tangen will permanently transfer his holdings and dividend rights from AKO Capital to the hedge fund’s charitable foundation, Norges Bank said Monday. He will also shift all his personal fund investments to be held as bank deposits.  

Tangen will replace Yngve Slyngstad, who resigned as chief executive after a dozen years heading the sovereign wealth fund. 

“I have taken these actions to remove any doubt about which hat I am now wearing,” Tangen said in a statement. “I want to be CEO of the oil fund, and have only one objective: creating wealth for future generations.”

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The decision addresses concerns raised earlier this month by the Storting Standing Committee on Finance and Economic Affairs, the parliamentary committee in Norway that also audits the central bank. 

Tangen took other precautionary measures to prevent a conflict of interest at Norges Bank, but that was not enough for the supervisory board, which pointed out that he still had an ownership stake in his former company. The Norwegian hedge fund manager founded AKO Capital 15 years ago in London. 

The Norges Bank executive board disagreed with the assessment. Board governor Øystein Olsen argued at the parliamentary hearing that Tangen emerged as the strongest candidate from the pool earlier this year.

“The executive board has been of the opinion that the contractual framework surrounding Tangen’s employment contract was sufficient in preventing potential conflicts of interest, but we have noted, of course, that the Storting takes a different view,” Olsen, said in a statement.

“Their concerns are something the executive board, in dialogue with Nicolai Tangen, has now addressed,” he added.

The incoming chief executive had been embroiled in controversy for months. A Norwegian newspaper reported soon after his appointment in March that predecessor Slyngstad took part in a private seminar Tangen hosted months before at the University of Pennsylvania. 

This news led to a public outcry about cronyism around his appointment, allegations Norges Bank has denied.

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ESG High-Yield Bonds Don’t Hurt Returns … But They Don’t Boost Them Either

Research from CIO Martin Fridson finds no statistically significant difference attributable to ESG factors.


Do investors have to sacrifice return to follow environmental, social, and governance (ESG) principles? That question is at the heart of the ESG debate, and is one that Martin Fridson, CIO of Lehmann, Livian, Fridson Advisors, has attempted to answer through ongoing research of the topic. However, his most recent findings are likely to disappoint investors on both sides of the issue.

Fridson’s analysis, which centers on the high-yield bond market, attempts to identify a residual ESG-related effect in the March returns of three high-yield ESG-based indexes: the ICE US High Yield ESG Tilt Index, the ICE US High Yield Duration-Matched ESG Tilt Index, and the ICE US High Yield Best-in-Class ESG Index.

The research, which was published by S&P Global Market Intelligence, looked at the selection process of the ESG Tilt and Duration-Matched ESG Tilt indexes, and found that they incorporate ESG objectives only by excluding bonds of issuers with significant exposure to controversial weapons, such as anti-personnel mines, nuclear weapons, cluster weapons, biological and chemical weapons, depleted uranium, and white phosphorus munitions. The analysis also focused on bonds with favorable ESG scores, as determined by Sustainalytics, and that are included in the best-in-class index, while those with unfavorable ESG scores are excluded. Fridson refers to the two categories as “bad citizens” and “good citizens.”

Fridson’s research found that the good citizens outperformed ESG bad citizens during the March sell-off by a statistically significant margin of 1.68 percentage points. But there is wrinkle to that.

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“On the face of it, high-yield investors were actually rewarded for high-mindedly restricting their holdings to bonds of companies with commendable environmental, social, and governance practices,” said the report. “Examination of the underlying data casts doubt on that conclusion, however.”

Fridson’s findings suggest that the reason the good citizens outperformed the bad ones had more to do with the fact that they had higher ratings. The report notes that 12.7% of the bad citizens were rated CCC1 or lower, compared with only 4.1% for the good citizens.

High-yield investors “need not sacrifice return to adhere to investment rules that exclude bonds of issuers they find objectionable on environmental, social, and governance grounds,” said the report. However, it also said that the findings “do not support, in the case of high-yield bonds, the contention of some proponents that concentrating on issues with favorable ESG scores increases investment performance.”

The report said that if issuers without significant involvement in controversial weapons, or that have favorable ESG scores, are inherently less risky than like-rated issuers that lack those characteristics, the bonds should beat the conventional high-yield index “most handily” in periods of sharply rising risk aversion. However, the research found no statistically significant performance differential that could be attributed to ESG factors.

“We conclude that high-yield investors are neither rewarded nor penalized for being on the side of the angels on a full array of environmental, social, and governance matters,” said the report.

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