Norges Bank Investment Management (NBIM) has radically shaken up the investment team overseeing the Norway Pension Fund-Global and changed its process to align better with its “long-term characteristics”.
Yngve Slyngstad, CEO of NBIM, revealed plans to increase the number of CIOs in the team from three to five, which will in turn affect how the fund’s NOK 5,478 billion ($886.5 billion) assets are allocated. The changes are to take effect in October.
“In regards to the CIO allocation, we have seen quite clearly that it is necessary for us to position the fund for the long term,” said Slyngstad at a press conference in Oslo today. “We are moving in the direction of trying to exploit the fund’s characteristics more clearly, and the way that we develop our investment strategies.”
The two new CIO positions are of allocation strategies, to be undertaken by Ole Christian Bech-Moen who is currently director of that unit, and asset strategies, to be taken on by NBIM’s current Head of Equity Trading Øyvind Schanke. These new roles will sit alongside the existing CIO of equities, retained by Petter Johnsen, while Slyngstad’s secondary role as CIO of allocation will be discarded.
A general chief risk officer role has also been created and will be undertaken by Dag Huse, already a senior figure in NBIM’s risk division.
The CEO indicated that the fund would be moving away from passive, index-hugging strategies, due to the large overlap it had with 80% of underlying indices. He said work had already begun on this and had resulted in significant reallocation of capital from countries and currencies.
Additionally, Slyngstad said company-specific investments would benefit from a newly merged equity and credit analyst function and be removed from the larger, more general portfolios.
“What we are doing in regards to our company-specific investments is to give the CIO responsible for this also the responsibility for the credit on the fixed income side of the companies. So it will be a merged analytical effort on the equities and credit side with regards to our interface with companies,” he said. “Petter Johnsen will also be responsible for our integrated ownership activities so we will have all ownership activities in one group, reporting to the CIO in this area.”
Karsten Kellevig, CIO of real estate, is to head up a larger team with the creation of a standalone division and the appointment of chief risk, operation, and administration officers in support. The team is expected to employ 200 people by the end of 2016.
Slyngstad said he expected to “invest 1% of the fund each of the next three years in the private real estate markets” in a “global but concentrated portfolio”.
On June 30, the fund had 61.3% invested in equities, 37.6% in fixed income and 1.2% in real estate.