Public Equities Propel 10% 1H Return for Norway’s Sovereign Wealth Fund

Following a weak 2022, the Government Pension Fund Global’s market value rose to $1.443 trillion at the end of June.




Strong equity gains helped propel Norway’s Government Pension Fund Global to a 10% return in the first half of 2023 to raise the sovereign wealth fund’s total market value to 15.3 trillion kroner (approximately $1.433 trillion).

Despite the robust return, the pension giant fell short of its benchmark’s return by 23 basis points.

After a weak 2022 (-14.1% overall return), the fund’s return on equity investments was 13.7% during the first half of this year, while its fixed-income investments returned 2.2%. Unlisted renewable energy infrastructure investments lost 6.5%, and unlisted real estate decreased 4.6%.

“The stock market has been very strong in the first half of the year, following a weak year in 2022,” Norges Bank Investment Management CEO Nicolai Tangen said in a release. “Especially technology stocks have seen significant growth, largely driven by the increased demand for new solutions in artificial intelligence.”

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As of the end of June, the GPFG portfolio’s asset allocation was 71.3% equities, 26.4% fixed income, 2.3% unlisted real estate and 0.1% unlisted renewable energy infrastructure.

The strongest returns within the pension fund’s equity portfolio in the first half of the year came from technology, consumer discretionary and industrial stocks, while energy had the weakest return. Tech firms returned 38.6%, which the pension fund attributed to strong demand for new AI solutions from the biggest internet, software and semiconductor companies.

Consumer discretionary was the second-strongest sector, returning 20.7%, as consumption and economic activity maintained their levels despite rising prices and interest rates. The pension fund also noted that the lifting of pandemic restrictions in China led to further optimism, especially among luxury goods stocks.

Industrials were the third-best performing sector with a 15% return, as strong growth in orders and increased demand outweighed recession fears. Energy companies returned only 0.4%, as prices for oil, gas and refined products fell back from their high levels of last year.

According to the pension fund, the main driver behind the losses to its unlisted real estate investments was the office sector, with U.S. investments in particular falling sharply during the first half; the U.S. office sector also negatively affected the Government Pension Fund Global’s listed portfolio.

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Ariel Investments Promotes Henry Mallari-D’Auria to CIO of Global, Emerging Markets

He will succeed Rupal Bhansali, who is leaving to start her own firm.



Chicago-based investment firm Ariel Investments has promoted Henry Mallari-D’Auria to CIO of global and emerging markets. Mallari-D’Auria, currently CIO of emerging markets value, will replace Rupal Bhansali, who is leaving the company to start her own firm.

The firm’s international and global team and emerging markets team will report to Mallari-D’Auria. Bhansali’s last day in her current role will be August 31, and she will stay on as a consultant through February 2024.

“We are grateful for all Rupal has contributed to the management of our International and Global strategies and wish her well as she pursues entrepreneurship,” stated a company memo to clients.

Mallari-D’Auria is currently responsible for Ariel’s emerging markets research and portfolio management activities. Prior to joining Ariel, he was with AllianceBernstein for 31 years, more than 20 as CIO of emerging markets value equities and portfolio manager of the company’s Next 50 Emerging Markets Fund.

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While at AllianceBernstein, he was also co-CIO of international value equities for nearly nine years and held various leadership positions, including head of the global value research department, director of research of small-cap value equities and director of research of emerging markets value equities. Mallari-D’Auria first joined AllianceBernstein in 1991 as a research analyst focused on consumer and natural gas companies, which expanded to coverage in the financial services industry.

“Given his multifaceted knowledge and significant experience, Henry is exceptionally well qualified to lead the day-to-day management of our International and Global portfolios as well as its dedicated research department,” the Ariel Investments statement emphasized.

Mallari-D’Auria will be the lead portfolio manager for international and global emerging markets strategies and will be supported by Micky Jagirdar, who will be the lead portfolio manager of the firm’s long/short strategy when it goes live.

“We are certain Henry will continue to manage the International and Global portfolios in the long-standing tradition of our actively patient approach to investing,” the company release stated. “While we know any change at the portfolio manager level can feel disruptive, we have great confidence in Henry’s ability to run the strategies while leading the talented I/G and EM research groups.”

 

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