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Analysis

Asset allocation at NBIM

by William Baunton

Mon 8 Sep 2014

Asset allocation of NBIM Enlarge Chart loading Image

What the chart shows: The asset allocation of Norges Bank Investment Management’s Global Pension Fund Global (GPFG) from 1996-2013, categorised into fixed income, equities and alternatives.

Why the chart is important: NBIM is the largest sovereign wealth fund in the world and is ranked 4th in OMFIF’s Global Public Investor 2014 top 400, with the same publication noting that it ‘can hardly avoid being some form of benchmark’.

At the end of Q1 of this year NBIM had 61.1% allocated in equities, 37.7% in fixed income and the remainder in real estate. As can be seen from 2006-09 NBIM reversed its previous allocation strategy of approximately 60% fixed income and 40% equity, which it had maintained since 1998.

In 2008, NBIM had the weakest returns in the fund’s history of -23.3% (when measured in international currency), due to its equity portfolio which made an annual return of -40.7% that year. Pushing allocation towards equities however proved to be a shrewd strategy, with the equity portfolio making a return of 34.3% in 2009, contributing towards a total portfolio return of 25.6% for that year, the strongest in the fund’s history.

Chart is part of a forthcoming OMFIF report. Data are from official NBIM annual reports. Alternative assets consist of ‘Environmental Fund’, alternative asset allocation and since 2011 only real estate assets. Data relate to Government Pension Fund Global portfolio only. Before 2006, the Government Pension Fund Global was known as Government Petroleum Fund.