Oregon Investment Council Releases Q3 Returns Ahead of Board Meeting

The Oregon Investment Council, investment manager for the Oregon Public Employee Retirement Fund, announced the fund’s quarterly results ahead of a Wednesday council meeting. The $91.5 billion portfolio returned 5.7% for the 12-month period ending September 30, underperforming the OPERF policy benchmark of 10.1%.

For the year’s third quarter, the Oregon fund returned negative 0.7%, slightly underperforming its benchmark, which returned negative 0.1% for the quarter, but slightly ahead of peers (median return of negative 1.3%). The fund attributed the loss to a challenging market environment for equities and fixed income, with the fund’s private equity performance lagging that of peers.

Public equity was the fund’s highest-performing asset class for the one-year period, returning 20.8%. Fixed income returned 2.4%, and private equity returned 5.1% (as compared with the Russell 3000 Index’s 22.5% gain), which the council’s report noted is the reason for relative underperformance, due to private equity’s higher allocation in the portfolio.

The fund has returned an annualized 9.2% and 7.3% over the past three and five years, respectively, exceeding benchmark returns of 6.8% and 6.9%, respectively.

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

The investment council is seeking to rebalance its portfolio, as multiple asset classes are currently outside of policy range. Public equity, private equity and fixed income comprise 19.7%, 28.6% and 17.7% of the OPERF portfolio, while the target allocations for the respective asset classes are 27.5%, 20.0% and 25.0%.

“Private equity remains well above target, while public equity and fixed income are underweight,” the report stated. The fund also allocates 14.7% of its investment portfolio to real estate, 9.7% to real assets, 5.3% to diversifying assets, 2.9% to opportunity and 1.3% in cash.

The investment council will discuss the fund’s investment results in detail at its December 6 board meeting.

Alline Akintore Joins Oregon Investment Council

Bill Calls for Oregon to Divest From Fossil Fuels

Oregon Integrates ESG Formally into Investment Policy

Tags: Asset Allocation, OPERF, Oregon Investment Council, Oregon Public Employees Retirement Fund (PERF)

Norway’s sovereign wealth fund made a request to the country’s ministry of finance to permit private equity investment estimated between $40 billion and $70 billion.

Norges Bank Investment Management, the manager for Norway’s national pension fund, is seeking a multi-billion-dollar private equity expansion of the Government Pension Fund Global. In a letter sent to the Norwegian Ministry of Finance, the fund requested permission to implement a private equity strategy.

The letter proposed a gradual approach to growing a private equity portfolio, eventually encompassing 3 to 5% of the fund, which corresponds to roughly $40 to $70 billion. According to NBIM, a private equity fund of this size would make it competitive with some of the largest private equity investors and would allow the fund to facilitate adequate diversification across managers and investment vintages.

NBIM does not currently have exposure to private equity, private credit or most alternative asset classes. According to the fund’s website, roughly 70% of its asset allocation is to public equities, and roughly 30% is in fixed income. The fund is permitted to invest up to 7% of the fund in real estate and up to 2% in unlisted infrastructure for renewable energy.

“It is our assessment that permitting investments in unlisted equities would be a natural evolution of the investment strategy,” said Ida Wolden Bache, chair of Norges Bank’s executive board, in a November 28 press release. “An increasingly larger share of global value creation takes place in the unlisted market. We believe that such an opening could give higher returns for the fund over time. We think it will be possible to invest in unlisted equities in a way that meet our expectations on transparency and responsibility.”

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

NBIM’s GPFG fund manages roughly $1.4 trillion in assets, making it the world’s second largest asset owner by AUM, following only Japan’s GPIF. If NBIM receives permission to start a private equity fund, the fund then would formulate a “more detailed investment strategy.”

The Ministry of Finance has rejected previous requests to invest in private equity, including in an April 2018 report.

Norway’s Pension Giant Bulks Up Boston Commercial Real Estate Holdings

Norway’s Sovereign Wealth Fund Drops $44.7B in Market Value in Q3

Norway’s SWF: Stop Talking, Take Action on Climate Transition

Tags: Government Pension Fund Global, Ida Wolden Bache, NBIM, Norges Bank Investment Management, Norway, Private Equity