Norway’s parliament to back broader investment brief for wealth fund

OSLO: Norway’s lawmakers are expected to grant the country’s $800 billion sovereign wealth fund a broader investment brief to better spread risk, the leader of the parliamentary finance committee said. The central bank, which manages the fund, last month recommended it should be allowed to invest in unlisted infrastructure projects and put a higher share of its assets into real estate, changes representing the biggest shift in strategy since it was permitted to buy property in 2010.

The fund currently invests about 60 percent of its value in stocks, 35 percent in bonds and up to five percent in real estate, all outside Norway. It can invest in companies involved in infrastructure projects, but it cannot take a direct stake in a project that is not listed on the stock exchange. “My understanding is that there is broad agreement on the need for adjustments that contribute to increased diversification ...to improve the distribution of risk,” finance committee leader Hans Olav Syversen told Reuters. “It’s my impression that all parties in parliament are open to making these changes.” According to letters from the central bank published by the finance ministry in December, the fund should be allowed to invest up to 5 percent in unlisted infrastructure projects and raise its stake in property to a range of 5-15 percent. The proposed changes are being reviewed by the ministry for inclusion in a white paper in April, after which they will be debated by parliament. There is a consensus among lawmakers welcoming the changes, though some adjustments are expected.

Separately, the government earlier this month appointed experts to evaluate how much of the fund should be invested in equities, reporting back in October with conclusions to be debated in parliament in spring 2017. Syversen, who is the finance spokesman for the Christian Democrats, a centrist party that the minority coalition government relies on for support, is keen for additional investments in emerging economies. “I feel it’s important to also open up for the possibility to increase investments in emerging markets. It could be through infrastructure, but also through private equity,” he said.

The other party the government relies on, the Liberals, favours a green push, which is already on the cards. The fund’s chief executive told Reuters in December it would invest in renewable energy were it allowed to invest in unlisted infrastructure projects. “(We believe) it is reasonable the oil fund expands its investments universe by going into renewable infrastructure projects,” the Liberals’ representative on the finance committee, Terje Breivik, told Reuters.

He added: “I am not at all sceptical towards increasing the investments in property to 10 percent, but I feel it’s just as important to look at how much government bonds the fund should hold.” Svein Flaatten, who represents the ruling Conservatives on the committee, said opening up to infrastructure and increasing real estate investments could hinge on the costs of doing so. His party was open to making changes to the fund’s allocations, he said, with raising the percentage of shares and cutting back on the fixed income portfolio an option. The finance ministry declined to say which proposals it would make in its upcoming white paper. — Reuters