The Government Pension Fund Global and NBIM reached two important milestones in 2010. In October, the fund’s market value passed 3 trillion kroner for the first time,an increase of 1 trillion kroner since 2008. The following month, the fund announced its first real estate investment, a move that extends our strategy to exploit the fund’s long-term outlook.
This long-term approach paid off in 2010, as large equity purchases during the financial crisis in 2008 and in the first half of 2009 yielded solid returns. The value of our fixed-income investments also continued to recover after steep price drops two years earlier. In a year marked by the European sovereign debt crisis and fears of an economic slowdown in Europe, where the fund has more than half its holdings, the fund posted its fifth-highest result ever in 2010. The return of 9.6 percent, or 264 billion kroner, was also 1.1 percentage points higher than the return on the benchmark index the fund is measured against.
Making investment decisions is the core of NBIM’s business and our aim is to deliver the highest possible return within acceptable risk limits. We rely on having highly qualified employees and continued to strengthen our competency in 2010. NBIM had almost 300 employees from 25 countries at the end of the year.
The fund invests globally outside Norway and has increased its international presence in recent years. We opened an office in Singapore in June, adding to offices in Shanghai, London, New York and Oslo.
The fund’s management was reviewed in 2010 and the Ministry of Finance concluded in its annual report to the Norwegian parliament that the investment strategy should be continued. Going forward, we will focus on the fund’s absolute return and seek to improve the tradeoff between return and risk in the fund. Not least, we will strive to take advantage of the fund’s long-term out- We will strive to take advantage of the fund’s long-term outlook. This will ensure that today’s petroleum wealth also benefits future generations look, investing in assets where it may take a long time for the underlying value to be realised. This will ensure that today’s petroleum wealth also benefits future generations.
Oslo 2 March 2011
Yngve Slyngstad CEO of NBIM