The world’s biggest sovereign wealth fund has expressed its commitment to the UK despite brexit
The world’s biggest sovereign wealth fund has expressed its strong commitment to UK, irrespective of brexit outcome. The $1 trillion Norwegian fund has said that it will continue to invest in the UK no matter what the outcome of brexit talks. The chief executive officer of the Oslo-based fund, Yngve Slyngstad said at a press conference in Oslo that it remains a long-term and committed investor in the UK in all asset classes. He said that the fund has a substantial real estate portfolio in London and it has a substantial investment in the equity markets and the fixed income markets. And these will remain at about the same level no matter what the event with regards to these political discussions will be.
Slyngstad was speaking regarding the fund’s annual results on Tuesday, which revealed that the fund recorded its biggest return on record in 2017. It ended the year by surpassing the $1 trillion mark. He said in the statement that the fund’s cumulative return since inception has passed 4,000 billion kroner. One out of four kroner of return was generated in 2017.
The fund has shocked markets by proposing to drop oil and gas stocks. Slyngstad said that the fund’s growing exposure to the stock market means that returns may be more volatile in the future. The fund owns on average 1.4 % of the world’s listed stocks and largely follows indexes but has leeway for some active management. It also aims to improve returns by raising the share of stocks in its portfolio to 70 %. It’s also increasing its influence in areas such as executive pay, corporate corruption and sustainable investing.
The 13.7% return was generated in a year characterised by the biggest stock-market boom in eight years which pushed stocks closer to a 70% target. The fund’s stock portfolio rose 19.4% in the year, while fixed income investments gained 3.3% and real estate grew 7.5%. It held 66.6% in stocks at the end of 2017, 30.8% in bonds and 2.6% in real estate.
Its biggest equity investments in 2017 were Apple Inc., Nestle SA and Royal Dutch Shell Plc., while its largest fixed income holdings were US, Japanese and German government bonds.
The fund has also invested in emerging markets over the past years to raise returns and it is currently weighing the idea of buying private equity and infrastructure.