NORWAY - The Government Petroleum Fund (Statens Petroleumsfond) is considering investments in emerging market fixed income.
This follows changes made to the fund’s list of eligible emerging market countries to include thirteen new countries for equity investments and eight new countries for fixed income investments effective January 1, in the National Budget 2004.
The fund recently tendered for new external active managers for emerging market equity and global equity following amendments to its benchmark equity portfolio.
“We are currently evaluating our fixed income investments following the decision to include new countries for emerging markets. However, a decision has yet to be made as to whether we will handle this internally or tender for external managers,” fund officials said.
Norges Bank had recommended the inclusion of Chile, Poland, Czech Republic, Hungary, Israel, the Philippines, India, China, Malaysia and Indonesia in the list of eligible countries but not in the benchmark portfolio. The Fund’s equity benchmark portfolio was amended to include South-Africa and to exclude Turkey.
Mexico, South Africa, Poland, Hungary, Czech Republic and South Korea were included in the list of eligible countries for the bond markets. Iceland and Cyprus were included in both equities and fixed income investments. However, no changes are expected to be made to the benchmark portfolio for fixed investments.
The National Budget 2004 which reviewed the fund’s investment strategy and evaluated the mix of equities and fixed income investments, ruled against investing in alternative investments.
After reviewing private equity and real estate, the Ministry noted: “The market for indirect real estate investment is growing and investments opportunities may improve in the period ahead.”
The market value of the fund is estimated at NOK857bn by the end of 2003 and expected to grow to NOK966bn at the end of 2004.
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