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.”

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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%.


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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.  

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“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.  

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