Norway to Include PE, Infrastructure; New Strategy Council

In a bid to increase returns, the $471 billion fund has intended to broaden its investments to include infrastructure projects and private equity investments.

(October 6, 2010) — Norway’s Government Pension Fund Global, the world’s second largest, plans to expand its investments to incorporate infrastructure projects and private equity investments.

“The fund is well-placed to carry the risk and harvest the potential gains from investing in less liquid assets,” the fund stated in a report released yesterday with its 2011 budget, noting its strategy to protect returns on the money it manages for future generations.

The oil-based sovereign wealth fund’s plan to increase returns comes after a report commissioned by the Finance Ministry, which stated: “Further development will seek to diversify the risk further and increase the weight of investments that benefit from the Fund’s size, long-term perspective and ability to hold less liquid assets.”

Additionally, the $471 billion fund announced that it was forming a strategy council, which will publish its first report by December 1, 2010. “Such independent and critical reviews will provide useful professional input while fostering greater transparency and discussion about important issues related to the long-term investment strategy of the Fund,” Johnsen stated in a release. Elroy Dimson, an emeritus professor at the London Business School, will head the group.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(October 4, 2010) — Adam Tosh, managing director of investment solutions at Rogerscasey and the former chief investment officer of the Kentucky Retirement System, calls Africa “the next frontier” and says that over the next five years, exposure to Africa should make up 1-2% of a total investment portfolio.

Despite instability, hunger, and widespread disease, Africa’s growing middle class has contributed to emerging institutional investment opportunities within the region, Tosh told ai5000. He says his firm, which advises on more than $315 billion in assets, is recommending that emerging markets be at least 20% of any pension fund or total portfolio. “Africa is not the place that you see just on the headlines on the evening news — there’s a lot more to Africa and investors need to understand the regions within Africa, how the dynamics of those regions play out, and how those different economies offer investors diversification.”

Cynthia Steer, Rogerscasey’s managing director and researcher of a new study on the topic, added that improving economic and political conditions in Africa has made investments more accommodating. “Promising political revolution is essential in improving the lives of the people who live there, as well as creating a stable environment for investors,” Steer commented in a statement. “Africa’s GDP growth has outpaced World aggregate GDP growth since 2001.” According to Steer, investors can find diversification while facilitating economic progress in what has been labeled as a troubled continent.

Additionally, Tosh said that Rogerscasey’s clients are trying to find innovative ways to capture diversification, starting to reevaluate domestic equity by seeking diversification elsewhere on a long-term basis. The consultancy has also found many US institutional investors haven’t given much thought to currency management. The firm is working with clients to make sure they use strategies that target specific currency risk as a way of gaining exposure to emerging markets. “It’s just one more way that clients can gain that exposure to emerging markets with greater liquidity,” he told ai5000.

For more stories like this, sign up for the CIO Alert newsletter. 

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742