Norway Oil Fund Chief Warns on Bonds With Returns Close to Zero

September 27, 2013 Leave a comment

Norway Oil Fund Chief Warns on Bonds With Returns Close to Zero

The head of Norway’s sovereign wealth fund, the world’s biggest, said the bond market will offer scant returns as the investor looks to expand into other asset classes to safeguard the nation’s wealth. “Returns in the bond markets are low and look to remain so for a good while ahead,” Yngve Slyngstad, chief executive officer of the $780 billion Government Pension Fund Global, said today in a speech in Bergen published on the central bank’s website. “The safest investment alternative gives today a return after inflation close to zero.”Norway, western Europe’s largest oil and gas producer, generates money for the fund from taxes on oil and gas, ownership of petroleum fields as well as from its 67 percent stake in Statoil ASA (STL), the country’s largest energy company. The fund, which has an average holding of about 1.2 percent of the world’s listed companies, invests abroad to avoid stoking domestic inflation.

Europe’s biggest equity investor, which gets its guidelines from the government, held 63.4 percent in stocks in the second quarter, up from 62.4 percent in the first quarter.

Its bond holdings slid to 35.7 percent from 36.7 percent of the fund while real estate comprised 0.9 percent. It’s mandated to hold 60 percent in stocks, 35 percent in bonds and 5 percent in real estate. The fund is undergoing a shift in strategy to capture more global growth. It is moving asset allocation away from Europe as emerging markets in Asia and South America gain a bigger share of global output.

“Over time it will be natural to be open for investment in more asset classes,” he said.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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