Most of the fund is invested in equities, which are ownership interests in companies. Another part is invested in bonds, which are a type of loan to governments and companies, and a final slice is invested in real estate and renewable energy infrastructure.
An equity, or share, is a stake in a company that entitles the holder to a proportion of its profit. How much profit a company makes depends on factors such as the economy, the company’s ability to create value, and market conditions.
The fund’s equity investments span around 9,000 companies in numerous countries, industries and currencies all around the world. Our investments are limited to companies listed on regulated exchanges, and the fund is not permitted to hold more than 10 percent of the shares in a listed company, with the exception of real estate companies.
Our equity investments are spread across a variety of . The greatest geographical exposure is to North America and Europe, followed by developed markets in the Asia-Pacific region and emerging markets.
The fund’s benchmark index is set by the Ministry of Finance. The equity portion of the benchmark index is based on the FTSE Global All Cap index. See the fund's benchmark index.
We use external managers to handle parts of the fund's equity investments. We award investment mandates to organisations with expertise in clearly defined areas. These managers will seek to beat the markets they operate in and generate excess return for the fund by using detailed and in-depth analysis of specific markets and companies. The mandates typically cover investments in emerging markets and small-capitalisation companies in developed markets. Read more about our external mandates.
Companies’ activities can have a great impact on local communities and the environment. Over time, this could affect their profitability and so the fund’s return. As a responsible investor, we make active use of our voting rights and vote at all shareholder meetings. We assess companies’ corporate governance and sustainability performance, and we issue clear expectations of the companies we invest in. There are also some types of company we choose not to invest in. Read more about our responsible investment management.
The equity investments consists of ownership shares in about 9,000 companies worldwide. On average the fund owns 1.5 percent of all listed companies.
When we buy fixed-income instruments, we are lending money to the issuer. During the loan period, the issuer pays us interest. The interest rate depends on factors such as inflation expectations, the maturity of the loan, and the creditworthiness of the issuer.
The fund’s fixed-income investments are allocated 70 percent to bonds issued by governments and related institutions and 30 percent to securities issued by the corporate sector.
Our investments in government bonds are distributed between countries according to the size of their economy as measured by GDP.
Most of these investments are in developed markets, with a high percentage denominated in euros, dollars, pounds and yen. These bonds will normally have a high credit rating and be very liquid. The mandate also permits up to 5 percent of fixed-income investments to be in bonds from issuers in emerging markets.
The fund invests not only in bonds issued by companies but also in covered bonds, which are issued by banks and backed by a portfolio of mortgages. Corporate bonds normally produce higher returns than government bonds.
All investments in corporate bonds follow an internal or external credit assessment. The portfolio is managed with the aim of ensuring that bonds with a credit rating below investment grade do not exceed 5 percent of the fund’s total bond holdings.
Percentage of market value of bonds in the benchmark index as at 30 June 2024.
The fund has investments in hundreds of buildings in cities worldwide. Investing in real estate generates annual rental income and helps shield the fund from the ups and downs of the stock market. This reduces the risk of the fund losing money.
We invest in office and retail properties in selected cities around the world, and in logistics properties that are part of global distribution networks. These are unlisted investments – in other words, they are not listed on a stock exchange.
We concentrate our investments in a limited number of major cities in Europe, the US and Asia. All have large and transparent real estate markets, are expected to see population and/or employment growth, and have potential for economic growth and increased trade. The cities we have chosen to focus on are: New York, Boston, Washington DC, San Francisco, London, Paris, Berlin and Tokyo. Our investments in these cities are mainly in office and retail properties of a high standard in prime locations.
We invest in office and retail properties in selected cities around the world, and in logistics properties that are part of global distribution networks. These are unlisted investments – in other words, they are not listed on a stock exchange.
We concentrate our investments in a limited number of major cities in Europe, the US and Asia. All have large and transparent real estate markets, are expected to see population and/or employment growth, and have potential for economic growth and increased trade. The cities we have chosen to focus on are: New York, Boston, Washington DC, San Francisco, London, Paris, Berlin and Tokyo. Our investments in these cities are mainly in office and retail properties of a high standard in prime locations.
Our investments in the logistics sector are spread across a wider geographical area. These properties are located close to key transport infrastructure and major population centres.
We invest with partners to benefit from their local knowledge and expertise. To gain access to the most attractive properties, we partner with large and respected investors with a local presence, a long-term investment horizon and interests that align with ours. We invest in real estate through subsidiaries to ensure good risk management and protect the fund’s assets.
The return on unlisted real estate investments depends on rental income, operating costs, changes in the value of properties and debt, movements in exchange rates, and transaction costs for property purchases.
We manage the properties in our portfolio in a responsible and environmentally sustainable manner, as we believe that this supports our objective of the highest possible long-term return. We work with our investment partners and asset managers to integrate sustainability improvements into the business plans for the properties. We have also published a guidance document on responsible management of unlisted real estate, which provides a basis for our dialogue with investment partners and asset managers.
The fund's real estate strategy includes both unlisted and listed real estate investments. The fund's investments in listed real estate companies have exposure to high-quality properties in attractive cities and sectors globally that complement the fund’s unlisted real estate portfolio. The listed portfolio is mainly invested in the residential, office and retail sectors. Geographically, it is split almost equally between the US and Europe.
The fund invests in renewable energy infrastructure in Europe and North America. We focus on projects with reduced power price risk, stable cash flow, and limited risk to the principal investment. We invest alongside high-quality partners with operational experience.
The fund invests in renewable energy infrastructure projects to improve the overall diversification. Up to 2 percent of the fund can be invested in unlisted infrastructure for renewable energy.
The management mandate was amended on 1 January 2020 to include this new investment area and allows for direct and indirect investments. The strategy supplements our existing unlisted real estate portfolio, and we draw on our long experience with unlisted investments. The mandate defines renewable energy infrastructure to cover production, transmission, distribution and storage of energy based on renewable energy sources.
Norges Bank’s Executive Board has established risk limits for geographies, project lifecycle and debt ratios. Within these mandate limits, we can invest in assets in developed markets in Europe and North America and in operational or construction phase assets.
In April 2021, we announced our first investment in renewable energy infrastructure. The fund signed an agreement to acquire a 50 percent interest in the Borselle 1 & 2 wind farm located in the Netherlands, with an installed capacity of 752 MW. The seller of the 50 percent interest was Ørsted. Ørsted will remain co-owner and operator of the project. Since then, we have made additional investments in Spain, Portugal, Germany, and the UK.
In August 2024, we entered our first agreement for an indirect investment through a fund. We agreed to commit 900 million euros to Copenhagen Infrastructure Partners' (CIP) fifth flagship fund, "CI V". CIP and CI V will invest in renewable energy with a focus on offshore and onshore wind, solar farms, grid and distribution, and storage. The investments will be equally split between three regions: North America, Western Europe, and developed countries in the Asia Pacific region.
We manage our investments in a responsible and environmentally sustainable manner, as we believe that this supports our objective of the highest possible long-term return. We have drawn up ESG guidelines for our investments in unlisted renewable energy infrasructure, which provide a basis for our doalogue with investment partners and asset managers.