September 21
Norway’s trillion dollar baby

Norway’s Government Pension Fund Global (or simply the ‘Oil Fund’ as its friends call it) grabbed headlines this week as it surpassed $1 trillion in value. To put that into context, it is roughly 40% of the GDP of the UK.

The Oil Fund is a peculiar beast with a vague aim to “underpin long-term considerations when phasing petroleum revenues into the Norwegian economy”. The Fund essentially takes revenues from Norway’s vast oil reserves and invests in international equities, bonds and property. Norway is saving for a time when it cannot rely on oil money – the Fund’s own website ominously states that “one day the oil will run out”.

Despite having the word ‘pension’ in its name, the Fund has no actual pension liabilities to speak of. Indeed, no political decision has been made as to when the fund may be drawn upon in the future. Governments tend to borrow from the future, rather than save for it, which makes the mere existence of this fund quite remarkable!

Given its enormous size, the Oil Fund is a major player on global investment markets. Indeed, the fund has $55 billion of equities invested in the UK alone. It owns an average of 1.3% of all listed companies in the world. If you can think of a company, the Oil Fund will almost certainly have a piece of it.

The Fund is also anything but shy, having voted against 6,700 board recommendations of its investees in 2016 alone. It also seems to take pride in being a responsible, ethical investor. The fund has recently disinvested from tobacco and coal companies and earlier this year set out its views on executive remuneration with the expectation that it will be wielding its significant power to effect change in this area in the future.

Norway's trillion dollar baby -picture.jpg

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