OSLO, APRIL 5
Norway's $850-billion sovereign wealth fund, the world's largest, should not be allowed to invest in unlisted infrastructure projects, the government said on Tuesday in its annual white paper.
The central bank, which manages the fund, had recommended that it should be allowed to invest in infrastructure.
The fund currently invests about 60 percent of its value in stocks, 35 percent in bonds and up to five percent in real estate, all outside Norway. In the future, allocations in real estate could rise to 7 percent, the government said.
“This solution gives a clear division of labor between the Ministry of Finance and the [central] bank, as well as an overall limit of the fund’s risk,” said Norway’s Minister of Finance Siv Jensen.
The central bank has requested to add infrastructure as an asset class for a decade, but the government said it was uncertain whether doing so would help diversify the fund’s holdings or deliver higher returns.
“Conflicts with the authorities of other countries regarding the regulation of transport, energy supply and other important public goods will generally be difficult to handle and will entail reputational risk for the fund,” Ms. Jensen said.
In addition, she added, Norway’s transparent and politically endorsed state fund is less suited to bear this type of risk than are other investors. It would also be useful to gain more experience with unlisted real-estate investments before expanding into other types of unlisted investments, Ms. Jensen said.
The changes proposed by the right-wing minority government might be amended following negotiations with its partners in Parliament. A final parliamentary vote on the proposals is expected sometime this summer.
WSJ Reporting :Kjetil Malkenes Hovland
Reuters: Reporting by Joachim Dagenborg and Gwladys Fouche
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