Norges Bank Investment Management: Positive return in a turbulent year
There was a positive return in 2007 on all of the portfolios managed by Norges Bank. The turmoil in credit markets triggered by the downturn in the US housing market impacted on results in 2007, especially in the second half of the year.
The return on the Government Pension Fund – Global in 2007 was 4.3 per cent measured in international currency. The fund’s market value at the end of 2007 was NOK 2 019 billion.
The return on the fund was 0.22 percentage point below the benchmark portfolio defined by the Ministry of Finance. Equity management generated positive results, while fixed income management produced a negative excess return. Since 1998, there has been a positive average annual excess return of 0.40 percentage point. This corresponds to NOK 23.5 billion over the whole period.
The return on Norges Bank’s foreign exchange reserves, which are invested with a long time horizon and in both equities and bonds, was 3.4 per cent in 2007. The return on the Government Petroleum Insurance Fund, which is invested exclusively in fixed income securities, was 5.2 per cent.
The portfolios managed by Norges Bank Investment Management (NBIM) had total assets of NOK 2 261 billion at the end of 2007. The long-term foreign exchange reserves accounted for NOK 214 billion of this, and the Petroleum Insurance Fund for NOK 15 billion.
Norges Bank strengthened its role as an active share owner in 2007. The level of direct dialogue with companies in the portfolio was stepped up, and NBIM’s Annual Report provides several examples of such dialogue.
One of the Bank’s priority areas is safeguarding children’s rights in companies in which we are invested, including combating child labour. NBIM is today publishing a document which clarifies our fundamental expectations of companies: NBIM Investor Expectations on Children’s Rights.
Norges Bank voted on more than 38 000 proposals at more than 4 200 companies in 2007, and details of all of our voting during the year are being published today on our website.
NBIM has reorganised its operations. The new organisation can be seen on NBIM’s website.
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