--> as I was mentioning on the last few days/ week, I still thin that the infrastructure sector/ plays could a very good theme for 2015...I still pushing Vinci...
Norway is to debate allowing its $870bn oil fund to invest in infrastructure in what would be the biggest change in the largest sovereign fund’s investment strategy since the financial crisis.
Investments in assets such as motorways, power stations and airports will be considered by an expert panel with a final decision to be taken in 2016. The oil fund’s strategy council will also consider whether the limit that it can only invest 5 per cent of its assets in property should be changed.
Norway has adopted a cautious strategy on whether the oil fund can invest in unlisted assets, which are popular with other sovereign-wealth investors and big pension funds such as Singapore’s GIC and the Canada Pension Plan Investment Board. Almost 99 per cent of Norway’s holdings are in listed equities or bonds and just 1.3 per cent in property.
Some experts argue that the long time horizon needed for infrastructure – and the better returns promised – make it a natural fit for a sovereign fund such as Norway’s that has no liabilities and wants to exist for decades if not centuries.
Managers of the oil fund have also long argued to be able to invest in infrastructure and other unlisted assets such as private equity. Oystein Olsen, governor of Norway’s central bank, which houses the management of the oil fund, said earlier this year: “To achieve returns, we must take on risk . . . As we gain experience in real estate investing, it may be natural to invest in other types of real assets”.
But Yngve Slyngstad, chief executive of Norges Bank Investment Management, the fund’s manager, has in recent months said that the fund’s sheer size makes investing in new asset classes more difficult.
Property was added to the fund’s list of possible assets in 2008 while the first real estate purchase came in 2011. But the fund has struggled to reach its 5 per cent target for property investments, increasing its share of assets from 0.9 per cent at the end of the third quarter last year to 1.3 per cent 12 months later.
“Private assets become a smaller issue the larger the fund gets,” Mr Slyngstad told the Financial Times this summer.
Critics argue that unlisted assets are a poor fit for the oil fund with its commitment to transparency by, for instance, updating the value of its holdings several times a second on its website. Espen Henriksen, assistant professor at the University of California, Davis, claims that the fund has no competitive edge in private, opaque markets and should stick to liquid, listed assets.
The oil fund’s strategy council, led by British professor Elroy Dimson, will now consider the matter. Siv Jensen, Norway’s finance minister, said on Tuesday: “Developing the fund’s investment strategy through better diversification will help to ensure continued robust, long-term management of the fund.”
If the fund is allowed to invest in infrastructure, it will be permitted to buy assets in the renewable energy sector and emerging markets, the ministry underscored.