World’s Largest Sovereign Wealth Fund Climbs Closer to $2T

Norway’s GPFG could be the first $2 trillion pension before the end of next year.



Norway’s sovereign wealth fund, the Government Pension Fund Global, reported a 4.4% return on investments for the quarter that ended September 30 to help raise its total asset value to 18.87 trillion kroner ($1.73 trillion), but it fell just shy of its benchmark’s 4.5% return.

The $76.5 billion investment gain was a sharp turnaround from last year’s third quarter when the pension giant’s portfolio lost 2.1% and shaved its total asset value by $34.3 billion to approximately $1.3 trillion. If the pension giant repeats the more than $400 billion gain in asset value it saw for the last year, it could be the first pension fund to crack the $2 trillion by the same time next year.

According to the GPFG, the third quarter investment return contributed 835 billion kroner to its total asset value. It also benefitted from the weakening of the krone during the quarter, which added 191 billion kroner to the pension fund, while another 99 billion kroner came from the Norwegian government.

“We had a positive return across all our investment areas,” Deputy CEO Trond Grande said in a statement. “Falling interest rates led to a broad rise in the stock market.”

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

GPFG’s unlisted renewable energy infrastructure investments led the investment returns for the quarter, up 10.8%, followed by its equity investments’ 4.5% return. The GPFG’s fixed-income investments earned 4.2% for the quarter, while its investments in unlisted real estate lagged with a 0.8% return.

As of the end of September, the fund’s equity investments had a market value of approximately $1.23 trillion, while its fixed-income investments had a market value of $463.6 billion. The GPFG’s unlisted real estate investments made up $29.2 billion of the portfolio, while renewable energy infrastructure accounted for $2 billion.

The pension fund’s asset allocation at the end of the quarter was 71.4% equities, 26.8% fixed income, 1.7% unlisted real estate and 0.1% in renewable energy infrastructure investments. The 4.4% return for the third quarter followed a Q2 return of 2.12% and a Q1 return of 6.33%, while the fund reported a 10-year annualized return of 7.53%.


Related Stories:

Norway’s Pension Fund Global Returns 2.1% in Q2; Asset Value Rises to $1.69T

Norway’s NBIM Takes Top Spot as World’s Largest Asset Owner

Tech Stocks Lead Norway’s Pension Giant to 6.3% Return in Q1

Tags: , , , , , , ,

Michael Hughes Appointed to Lead Portfolio Management at Verus

Hughes will lead investment management efforts across the firm’s OCIO business.

Michael Hughes

Updated with correction.

Investment consulting firm Verus Advisory Inc. has announced the appointment of Michael Hughes as managing director of portfolio management. Hughes will lead the investment management efforts for the firm’s outsourced CIO business.

Hughes will partner with CIO Ian Toner and the firm’s strategic research team to address client needs through determining strategic, structural and tactical investment views; selecting managers; and ensuring effective implementation of strategies.

“Both Mike’s leadership skills and capital markets expertise will be extraordinarily additive to Verus,” said Jeffrey MacLean, CEO of Verus, in a statement. “With an extensive 35-year career in investment management, Mike brings a wealth of experience in leading investment teams, guiding strategy development, and conducting thorough manager due diligence. We are delighted to have him join the Verus team.”

Previously, Hughes was a vice president and senior portfolio manager at Northern Trust Asset Management. He was also previously CIO of Cornerstone Advisors and director of portfolio services and chief fixed-income strategist at Perkins Coie LLP.

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

“I’m excited to join a dynamic industry leader like Verus that is fully committed to cultivating its burgeoning OCIO business, as client needs in that area continue to flourish,” Hughes said in a statement.

Hughes earned a bachelor of science degree from the University of Colorado, Boulder and an MBA from the USC Marshall School of Business.

Verus also made several recent shifts after Shelly Heier, its president, stepped down in September to join Russell Investments. Kraig McCoy, its chief financial officer and chief operating officer, was promoted to president (while retaining the CFO title) and will share Heier’s duties with MacLean.

Related Stories:

Shelly Heier, President of Verus, to Depart This Month

OCIO Firm Wurts Rebrands as Verus

Goldman Sachs Acquires Verus; Active Management Can Thrive

Tags: , , ,

BCI Sees Progress and Room for Improvement on Company Engagement

The $181 billion Canadian pension fund voted against management more than one-quarter of the time in fiscal 2023.



The British Columbia Investment Management Corp. voted on more than 30,000 agenda items at nearly 2,500 public company shareholder meetings in fiscal 2023, supporting more than half of all proposals and voting against management more than one-quarter of the time, according to the pension fund’s inaugural stewardship report.

The C$250.4 billion (US$181.4 billion) pension fund announced it also directly engaged with 134 public and private companies during the fiscal year that ended March 31 and met its objective 16% of the time. The pension categorized its levels of engagement success into four classifications: “objective achieved,” “positive momentum,” “neutral,” and “lagging.” It defined “positive momentum” as situations in which companies have responded to the pension fund’s outreach, some of its objectives have been met and “some level of constructive engagement has occurred.”

“Neutral” engagement with companies indicates the companies have either not yet responded to the pension fund’s requests or have met with BCI with no indication of progress related to disclosure or performance. “Lagging” companies are those that have declined the pension fund’s outreach and may show a decline in either disclosure or performance.

BCI categorized 42% of its engagements in fiscal 2023 as “positive momentum,” 40% as “neutral” and 2% as lagging, in addition to the 16% of the engagements where its objectives were achieved.

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

“While there is significant work ahead, the progress we are seeing from companies and policymakers alike reinforces our belief that multifaceted engagement can drive real-world outcomes,” BCI’s global head of ESG, Jennifer Coulson, said in a statement.

Regarding climate disclosure, BCI stated it voted against more than 100 directors for insufficient climate disclosure, while supporting about two-thirds of climate-related shareholder proposals. Those proposals included seeking additional emissions data from companies in high-emitting sectors, as well as calling on oil and gas firms to include climate risk assessments in their audited financial statements.

The stewardship report highlighted progress on increasing the representation of women on Canadian corporate boards, noting that there has been a 301% increase in average female board representation on the TSX Composite Index to 36.6% in 2023 from 9.1% in 2011. It also noted a 425% jump in the number of companies providing full disclosure under Sustainability Accounting Standards Board standards since 2020.

“BCI’s inaugural stewardship report builds on more than two decades of responsible investing,” Gordon Fyfe, BCI’s CEO and CIO, said in a statement. “Active ownership is critical to delivering the returns our clients depend on, both through the management of risks associated with responsible investing and by capturing sustainability-related opportunities.”


Related Stories:

British Columbia Investment Management Returns 7.5% in Fiscal 2024

British Columbia Investments Names Fyfe as New CEO and CIO

Canadian Pension to Invest C$5 Billion in Green, Social Bonds by 2025

Tags: , , , , , , , ,

Private Fund Advisers Rules in Retrospect: Just Sound and Fury, Signifying Nothing?

Although vacated by a federal court earlier this year, the rules’ themes are still worth consideration

Stan Polit

In the highly competitive private funds space, there is rarely a moment when fund managers and institutional investors feel like a “winner” at the same time. One day this summer, both groups came close.

For nearly a year, the asset management industry had been at odds with the Securities and Exchange Commission over a new set of regulations: the Private Fund Advisers Rules . These rules represented one of the most comprehensive set of regulations for private funds since 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act. Of the many issues at stake was the fate of one of the industry’s most important negotiating tools: the “side letter,” the very vehicle by which institutional investors can exert their power and influence to extract preferential terms. These agreements are so ubiquitous that I tell new fund managers who try to avoid them that, much like laundry and taxes, side letters are a certainty of life.

The PFAR could have changed that dynamic. Not only would the rules have prevented fund managers from selectively granting liquidity and transparency rights in all but a few circumstances, but they also would have required them to disclose all “material economic rights” to investors. For a historically secretive industry, this amounted to near heresy. With so much at stake, it is not surprising that many participants in the asset management industry let out a collective sigh of relief when a federal court vacated the rules in June.

While these rules may be in the proverbial rearview mirror, a lingering question remains: Do these rules still matter? The PFAR may no longer be gospel, but it does not mean the principles behind it have gone away, and this matters for both fund managers and institutional investors alike.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

The several hundred pages of ink spilled in the PFAR’s adopting release was no accident. It reflected larger trends in the way both the SEC and private fund managers view some of the thorniest issues facing alternative investing. Institutional investors seeking to maximize the value of their private fund investments must not ignore these trends. Instead, they may need to learn how to strategically navigate an investing space where the status quo may be shifting.

A Reflection of Both Past and Future Trends?

To understand why the PFAR still matters for the institutional investing community, it is important to view these rules within the context of other trends in the private funds sector. At the core of the “Preferential Treatment Rules,” which encompassed the prohibitions on selective liquidity and transparency terms, was the issue of conflicts of interest. For example, is it fair or equitable to allow an investor with more leverage to request terms in a collective investment vehicle that gives them an “edge”? While fund managers may have bristled over these rules limiting their ability to grant certain terms (and obliging them to disclose the rest), this does not mean that they had not already been concerned about the very conflict issues they tried to address.

Even before these rules had been adopted, fund managers and institutional investors alike had expended much mental (and commercial) energy determining who was granted preferential rights and on what terms. For example, on the investor side, it had been a priority to ensure that the “most favored nations” provisions in their side letters included the ability to opt into preferential liquidity terms granted to other investors. At the same time, a segment of the fund manager space had been skittish about the prospect of selectively placing certain liquidity rights in the hands of their most significant investors. Some fund managers went as far as taking the position that they would not entertain such requests—not as a commercial matter, but rather as a matter of policy.

The specter of the PFAR may lend credibility to the view of some fund managers that certain terms are so conflict-ridden that they should not be granted in side letters. While the post-PFAR regulatory space is still evolving (and may be significantly impacted by November’s election), it would not be a surprise if some of the considerations at the heart of these rules made an appearance in the SEC’s examination priorities in the future (as they had been a subject of SEC inquiry prior to their adoption). These commercial realities, combined with regulatory uncertainty, may mean that some fund managers going forward are more likely to use the principles by these rules as a “shield” against granting certain investor preferences.

Charting the Path Ahead

A post-PFAR world does not mean that the leverage held by institutional investors is gone. It just means that these investors may need to refine their approach to a quickly evolving space.

Meeting these potential challenges requires a refined approach that considers larger trends. As a threshold matter, in a world in which requests for liquidity terms may be more likely to be rejected, institutional investors may need to factor this into their due diligence review and overall risk assessment. If such terms are to be sought, these investors may consider framing these requests such that they apply to all investors, rather than just to them, specifically, due to their reputation or check size. For example, while an investor-specific notice right may be viewed as creating PFAR-esque conflicts, framing that same request as applying to all investors gets to the same goal, while eliminating some of the fiduciary-driven arguments that may make the request hard to accept.

Institutional investors subject to certain unique legal and regulatory considerations may also consider the importance of framing certain requests, to the extent applicable, as a compliance (rather than commercial) matter. Framing these requests in this way may help make such terms more palatable to fund managers, as even the PFAR provided a carveout for selective liquidity rights granted due to specific legal or regulatory needs. While not all terms lend themselves to these kinds of approaches, taking a more purpose-driven approach may set up institutional investors for greater negotiating success.

The  primary legacy of these rules is uncertain. It may take several years (or more) before its full impact is realized. While it is impossible to clearly read the “tea leaves” and predict the future, using the past and present as a guide may be the best way to chart the path ahead in the private funds market.

Stan Polit is a partner in the financial markets and funds group at Katten Muchin Rosenman LLP. His practice focuses on helping U.S. and international financial institutions, including private fund managers and institutional investors, navigate complex domestic and cross-border transactional and regulatory matters.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.

Tags: , , , ,

NYC Comptroller Lander Proposes Excluding Fossil Fuels From Future Infrastructure, Private Equity Investments

The proposal for three New York City pension funds would expand divestment to fossil fuel reserve owners and private markets infrastructure, such as pipelines and distribution terminals.



Brad Lander, New York City’s comptroller and a fiduciary of the New York City pension system, proposed on Tuesday the exclusion from three New York City pension funds of future private markets investments in upstream and downstream fossil fuel infrastructure.

The proposal, which Lander will present to the trustees of the New York City pension system in 2025, would cease pension investments in fossil fuel infrastructure, including midstream and downstream infrastructure, pipelines, distribution facilities and liquefied natural gas terminals.

At a news conference, Lander said the divestment proposal is the first in the country for a pension fund. “That’s a big step that has not been taken by any large U.S. public pension fund, and we will have some work to do together to put it into place,” Lander said.

The five New York City pension systems—the Teachers’ Retirement System, the New York City Employees’ Retirement System, the New York City Police Pension Fund, the New York City Fire Pension Fund and the New York City Board of Education Retirement System—collectively manage $282.42 billion in assets. The pension system has nearly 800,000 beneficiaries.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

NYCERS, TRS and BERS had previously divested from fossil fuel reserve owners across their equities portfolios by 2022 and excluded upstream investments in their private assets’ portfolios in 2023. The latest proposal would be an expansion of the previous exclusions and divestments. Those three pension funds managed $206.25 billion in assets as of the end of August,

Lander, who announced in July that he will run for New York City mayor in 2025, has been among the most vocal pension leaders in favor of fossil fuel divestments. The New York City pension system was the first in the country to divest from fossil fuels, beginning the process in 2018.

In September, a panel featuring Brad Lander at the Council of Institutional Investors’ fall conference was interrupted by climate protestors, who criticized the comptroller for allegedly not doing enough to divest fossil fuel investments. 

Related Stories:

NYC Comptroller Brad Lander Disrupted by Climate Protestors at CII Conference

NYC Pensions Reach Climate Disclosure Deal With JPMorgan Chase, Citigroup, RBC

NYC Comptroller: Major Banks Neglect Their Own Net Zero Goals

Tags: , , , , , ,

NZ Super Picks Internal Candidates as New Co-CIOs

Brad Dunstan and Will Goodwin will be promoted to share the investment chief position.

Will Goodwin

Brad Dunstan

The Guardians of New Zealand Superannuation, the entity which manages the NZ$80.1 billion ($48.49 billion) New Zealand sovereign wealth fund, announced Tuesday the promotions of Brad Dunstan and Will Goodwin to co-CIO, effective December 2.

The duo succeeds Stephen Gilmore, who left the fund in June to take on the role of CIO at the California Public Employees’ Retirement System. Alex Bacchus, previously head of strategic tilting, will remain acting CIO until the appointments of Dunstan and Goodwin are effective.

Dunstan joined the fund in 2013 as head of portfolio completion and is currently the funds acting general manager of portfolio completion. Goodwin is currently head of direct investments and was previously head of the fund’s New Zealand direct investments.

“Taking into account the projected future growth of the Fund and the increasingly complex and challenging investment environment in which we are operating, it makes sense to combine the functions of the CIO and the GM Portfolio Completion and create a co-CIO model,” said Jo Townsend, NZ Super’s CEO, in a statement.

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

Dunstan earned a bachelor of commerce degree in management, accounting and finance from the University of Canterbury in Christchurch, New Zealand, and was previously co-head of European equity derivates at Collins Stewart.

Goodwin earned a bachelor of commerce and administration and a master of applied finance degree from Victoria University of Wellington, New Zealand. Goodwin is chair of the Institute of Finance Professionals New Zealand Inc. and was chairman and director of Kiwi Group Holdings.

The New Zealand Superannuation Fund is the entity which manages the superannuation of New Zealand; all the country’s citizens are eligible for income from the NZ Super upon retirement.

Related Stories:
NZ Super Fund Posts 15% Return for Fiscal 2024, Just Shy of Benchmark

NZ Super Begins Hiring Process for Next CIO

Alex Bacchus Appointed Acting CIO of NZ Super

Tags: , , , , ,

Larry Fink: Supercharge Economy Through Infrastructure, AI Investing

Speaking at SIFMA’s annual meeting, the BlackRock head suggested utilizing capital markets to grow the economy above the trend line.



BlackRock CEO Larry Fink, speaking at the Securities Industry and Financial Markets Association’s annual meeting on Monday, stressed the need for policy makers to address the federal deficit and $36 trillion national debt, pointing to the strength of U.S. capital markets as a way to improve the country’s fiscal woes.

“The economy is growing about 3%, but if you take out the excess spending of the federal government [$1.8 trillion deficit], that’s an equivalent of 6% GDP,” Fink said. “The growth is on the back of debt; the growth is not on the back of equity … we are going to have a [debt] crisis.”

One way to tackle the deficit, the CEO of the $11.5 trillion asset manager said, is to grow the economy above the trendline by investing in major projects like infrastructure and artificial intelligence.

Fink pointed out the billions that AI and data center projects cost, noting that these investments are opportunities for private capital to grow the economy.

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

“I’m not frightened of this deficit, but it’s pretty cautionary if we don’t find a way to unlock growth,” Fink said. “This is my message to every politician: We need to be unlocking growth from the private sector, and the U.S. is in the best position of any country in the world because of the scale of our capital markets.”

Fink says the way to unlock capitalism and achieve this growth is not to raise or lower taxes, but to make the capital markets more efficient, so that they can provide more funding for more segments of the economy. 

Permitting reform is needed to clear a major hindrance to building needed infrastructure projects, Fink noted in his remarks: “The permitting process is inhibiting growth, inhibiting opportunity.”

Fink also pointed to the role that private credit can play in infrastructure investing.

“I think the biggest growth of private credit can be infrastructure credit,” Fink said. “I believe you’re going to see more and more opportunities in all the different shades of credit.”

Related Stories:

Takeaways From BlackRock CEO Fink’s Annual Letter

BlackRock’s Purchase of GIP Deepens Its Alts Exposure

Gap Narrowing Between Infrastructure Investments and Allocation Targets

Tags: , , , , , ,

Rest Super Names Interim Co-CIOs

Two senior members of the fund’s staff will share the role when current CIO Andrew Lill departs.



Rest, one of the largest superannuation funds in Australia with A$86 billion in assets under management ($58.87 billion), has promoted two of its senior investment leaders to serve as co-chief investment officers.

Simon Esposito, the fund’s head of private markets and deputy CIO, and Kiran Singh, its head of listed assets, will share the role on an interim basis, in addition to their existing duties. Their appointments will commence after CIO Andrew Lill departs next month.

Vicki Doyle, CEO of Rest—Retail Employees Superannuation Trust—said the high caliber of the interim appointees was a testament to the strength of the leadership and expertise within the fund’s investment team. A comprehensive search process to appoint a permanent CIO is underway, according to the fund.

Doyle said Esposito and Singh are highly skilled investment professionals and leaders with the experience to carry on the strong foundations Lill established.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

“As well as their deep knowledge of investing across private and public markets, Simon and Kiran both have an in-depth understanding of Rest’s whole-of-fund investment approach and our member-centric investment portfolios,” she said in a statement.

Esposito joined Rest in 2014 and has served in a variety of roles, though his primary focus has been direct investments across unlisted property, infrastructure, agriculture and private equity assets. Esposito has also been a senior member of Rest’s wholly owned investment management company, the Super Investment Management team, which was integrated into Rest’s investment team in 2020.

Meanwhile, Singh joined Rest in 2021 with responsibility for its listed equities, fixed-income and credit asset classes, encompassing both internally and externally managed strategies. He has also overseen the establishment of the fund’s first internal global equities function.

This article first appeared in our sister publication, Financial Standard, which, like CIO, is owned by ISS STOXX.

Tags: , , , , ,

«