Norway Looks to Up Equity Allocations For its $800 Bill Sovereign Wealth Fund

Another Petro-nation finds itself in a bind, stuck with massive amounts of cash and nowhere to invest it. The Vikings in Norway are permitted to invest up to 60% of the fund into equities. Thus far, they’ve done a real shitty job, as the fund only gets an annual return of 4%.

Perhaps they should subscribe to Exodus?

Norway is looking for ways to boost returns that have barely reached a net real return goal of 4 percent amid low interest rates. The country is also facing shrinking income from oil and gas production, which feeds the fund, amid a collapse in crude prices. The Conservative-led government is already studying whether to allow the fund to invest in unlisted infrastructure and raising its allocation in real estate.

Norway’s central bank, which manages the fund for the Finance Ministry, has called for an increased allocation in equities. Still, that’s not necessarily what the new committee will propose even if it does advise the government to change the fund’s mandate, Mork said.

Predictable Returns

“I don’t have any presumption that it should be an increase if there should be a change,” he said in a phone interview. The expected 4 percent return is “supposed to cover public expenses for public services, which authorities want to be delivered regularly and predictably over time, without big fluctuations. If the fund takes big risks, the fund’s value will fluctuate and the 4 percent figure will also fluctuate.”

I think tossing more money into stocks is a great idea. After all, what could go wrong?