6/14/2013 05:56:25 AM

Norway Retains Its Sovereign Wealth Crown

Abu Dhabi SWF beaten into the runner-up spot for the second time in seven months.

(June 14, 2013) - Norway's Government Pension Fund has been named as the world's largest sovereign wealth fund.

Boasting $737.2 billion in assets, Norway topped the most recent list compiled by the SWF Institute, published on June 13. It's the second time in seven months that Norway has taken the top spot.

Arriving in second place was UAE's Abu Dhabi Investment Authority (ADIA), which is estimated to have $628 billion in assets.

The third position was held by China's SAFE Investment Company ($567.9 billion), followed by Saudi Arabia's SAMA Foreign Holdings ($532.8 billion), leaving China's Chinese Investment Corporation in fifth place ($482 billion).

Since November 2012, when Norway first usurped Abu Dhabi in the rankings, the Norway government pension fund has increased its assets by $81 billion. By contrast, the ADIA has only increased its assets by $1 billion.

Norges Bank Investment Management, which manages the SWF fund, holds 60% of its assets in equities, between 35% and 40% in fixed income and up to 5% in real estate. The investments are spread globally outside of Norway, and the fund has an upper limit of 10% on ownership in any given listed company.

The fund maintains broad exposure to stock, bond and real estate markets, as well as seeking exposure to risk factors that are expected to generate high returns over time. It also aims to identify long-term investment opportunities in specific sectors and companies.

ADIA by contrast is far less transparent, although it was revealed in May 2013 that it had brought five percentage points of its considerable assets under the auspices of ADIA's in-house investment team, leaving 75% being managed externally.

More of the fund's assets are now managed on an active basis, according to ADIA's latest annual report. At the end of 2012, around 55% of the assets were run on index-replicating strategies, down from 60% a year earlier.

To be able to run all this new money internally, ADIA increased its headcount by approximately 10% over the previous 12 months from 1,275 at the end of 2011 to around 1,400.

In terms of asset allocation, ADIA's strategic portfolio has remained largely the same as last year - however, it has trimmed its developed markets holding from a maximum and minimum of 45% and 35% to 42% and 32% respectively.

Other interesting entries into the SWF Institute's rankings were the Kuwait Investment Authority with $342 billion under management. Ranked sixth in 2013, the Kuwaiti SWF wasn't even in the top 25 last November.

The US Texas Permanent School fund also leapt into the top 25 for the first time, amassing $25.5 billion, alongside Ireland's National Pensions Reserve Fund ($19.4 billion) and New Zealand's Superannuation Fund ($18.5 billion).

The full rankings can be found here.

Related News: Will Sovereign Wealth Investments Save the Rupee? and China Sovereign Wealth Fund Boosts Assets to $500bn

Contact the writer of this story:Charlie ThomasCharlie ThomasAssistant European Editor, aiCIO(44) 207 397 3827cthomas@assetinternational.comFollow on Twitter at @ai_CIO