Europe’s biggest equity investor continues buying European shares

Norges Bank Investment Management, which manages Norway’s sovereign wealth fund – the Pension Fund Global also known as the ‘oil fund’ – is set to spend NOK100bn (€13bn) buying European equities this autumn.

The NOK3trn or €387bn fund already owns about 2% of all listed equity in Europe, but is intent on boosting its purchases  in the region becuase of what it sees as a good opportunity to buy shares at cheaper prices, report both Bloomberg and Dagens Næringsliv.

The policy is likely to continue, despite the previous trouble the fund has had from volatile equity markets. It lost NOK633bn (€82bn) in 2008 in the post-Lehman Brothers financial crisis, although made subsequent gains of 26% and 9.6% in 2009 and 2010 respectively.

NBIM chief executive officer Yngve Slyngstad pointed to another ongoing shift in the fund’s objectives: in future it may take fewer but larger positions in companies. One example is the 7.5% stake in asset management business BlackRock. However, as Dagens Næringsliv notes, the fund’s mandate prohibits it from taking more than a 10% stake in any listed company.

Another shift is the geographic exposure. Currently its equity split is 50% Europe, 35% US and 15% Asia and Oceania. Slyngstad and NBIM have lobbied Norway’s Parliament to be allowed to adjust the ratios, in particular to increase exposure towards Asia and emerging markets.

The manager also intends to hire more staff for the unit responsible for sector and company based investments. In particular it sees this as a growth area that will require more people carrying out fundamental analysis.

 

 

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