Slyngstad—the CEO of Norges Bank Investment Management
(NBIM), the division of Oslo’s bank that manages one of the largest
sovereign wealth funds on the planet, Norway’s colossal $457
billion Government Pension Fund—speaks with ai5000.
Yngve Slyngstad
Confident but Cautious
Compared to most other funds, we put an enormous emphasis on socially responsible investing, although
we label it ESG: environmental, social, and governance issues. We have several investment units.
One is ownership strategy, which has responsibility for all ownership activities spanning everything
from corporate governance to environmental and social issues. This year, we have two specific portfolios
running: one on water technology and the other on clean energy technology in which we are investing
roughly $1.2 billion USD. These correspond to six focus areas in our corporate governance efforts:
climate management, water management, children’s rights, (and the more traditional) equal treatment
of shareholders, board accountability, the shareholders’ right to influence, and well-functioning capital
markets. We can’t be everything to everyone. We continue to do our hard work in the area of climate
change and, if people feel that we do too little, we invite them to take a closer look at what we’re doing.
As our fund is approaching $500 billion USD, there is a huge responsibility. We have ownership in more
than 8,200 companies. We try to zero in on our six target areas that focus on specific industries. We
do annual surveys on these industries and come back to companies year after year with requests and
compliance reports. We’re not for or against active or passive management for smaller firms or
investors. What we are saying is that, for an investor of our size, we need to be a leader and take an active
role. We don’t really think that there is an alternative to active management for our fund. In one sense, we
are quite simply too large to contemplate indexing. The 2009 result certainly was positive. We had a 31%
return in U.S. dollars, or 26.7% in euros, recapturing all the lost ground of 2008. We have come through
one of the worst financial crises without any losses. It’s a surprise and a definite advantage to see returns
coming back so rapidly; however, it wouldn’t really have changed our strategy had it taken longer. Our
horizon is 30 years. What we really are focusing on is the amount of money that is going to be left for our
grandchildren. We have 62.4% of our portfolio invested in equities, so we’re not going to increase our
equity purchases in 2010 to any significant degree. We are reducing our bond exposure and increasing
our real estate allocation from 0% to 5% over the course of the next two years. We are spending some
time doing it because we see challenges for the real estate market going forward. If you take a 10-year
perspective, it is natural for this firm to have 10% of the fund in real estate, so that’s one of our focus areas
going forward. It’s clear to everyone that there are still a lot of macroeconomic uncertainties. In
one sense, it’s a challenging environment for investing. We have to be prepared for it to be highly volatile.
At the same time, we are quite confident with our investments and portfolio. Confident but cautious. ”
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