NORWAY - The NOK38bn (US$5.4bn) Oslo Pensjonforsikring has employed new tactics in order to reduce risk in its investment portfolio, according to MandateWire.
Explaining the fund's battle to minimise damage during the financial turmoil, chief investment officer Kjetil Hough told MandateWire: "There is a combination of different measures we have taken. First you have the outright reduction in equity holdings. We have also bought some protection through optionality or put options and we have tried to make our equity portfolios more efficient and more liquid and also tried to diversify internal equity portfolios a little bit better."
According to Hough, the fund has been specifically aiming to make its equity portfolio more global, whilst at the same time it has limited risk through diversification across different areas as much as possible.
"We have diversified across countries but also within countries," he said.
Alternative investments are not an option for the fund at present because regulation prevents it from expanding its investments further into the area.
"Within our current regulations we are very close to the maximum limit in alternatives, so we cannot exploit that in order to reduce risk. We have tried to minimise currency risk, counter party risk and improve liquidity instead," Hough said.
The fund's risk spreading has also been implemented through manager selection.
"We have a number of managers within each asset classes," Hough said, adding that the fund has recently appointed "a number of new managers" for global equity and "some new" hedge funds, but this was more due to the fund's normal investment activity rather than a reaction to the market conditions.
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