Closing remarks by Slyngstad

Today’s presentations have illustrated that the research frontier of financial economics is highly relevant to the challenges NBIM faces as manager of the Government Pension Fund Global and that many of you face as practitioners in the financial industry. As such, I hope the conference has been successful in bridging the gap between the world of academic finance and the world of investment professionals.

NBIM’s mission is to safeguard and build financial wealth for future generations through the management of the Government Pension Fund Global. Our investment strategy seeks to build on the fund’s defining characteristics and the owner’s long-term return target.  A key objective is to implement long-term oriented and scalable invest¬ment strategies for the fund based on theoretically founded analytical insights. Further, we will strengthen our financial theory resources and research efforts on investment advice to the owner.

Research in the field of financial economics is progressing, and new insights may have important implications for the fund’s management. Progress in academic research can impact how effective we are in achieving our goals to create value and achieve a better risk-return relationship for the fund.

We have a long-term interest in the pursuit of excellence in financial economics carried out by individuals and academic institutions close to us. The fund will benefit if we conduct our business in an environment where conventional views are challenged and people strive for new insight.  

The long-term commitment to the quality of the fund’s management, the importance of financial research and our ability to make an impact led Norges Bank to set up the Norwegian Finance Initiative (NFI).

Through the NFI, NBIM will strengthen its ties with the academic community. NBIM will also expand its internal research capacity to support the development of investment processes that are long-term oriented and scalable. It is of key importance for us to promote interaction between our organisation and leading international academics in the field of finance to harvest insights from the frontier of financial research and to strengthen our management of the fund.

Going forward, the initiative will be a vehicle to provide credible, long-term incentives to promote excellence in teaching and research in financial economics and be a catalyst for sustainable and long-term improvements in the research output at academic institutions. In the first phase, we will focus on implementing a few achievable targets. Longer term, the NFI’s goals may be more ambitious.

The initiative will emphasise areas within financial economics of particular relevance to the fund’s management. Development in asset pricing and portfolio theory goes to the heart of how we think about, define and develop the fund’s strategy. Other areas of financial economics also have direct relevance to our business. Corporate finance and research on corporate governance issues will influence how we exercise our ownership rights and develop ownership policies. I also believe that research in the field of market microstructure, how the different market places work, and the impact our own actions have on these markets, is a rich field for future research. New insights in the field of market microstructure may influence how we execute trades.

To ensure independent, credible and impartial commitment to the highest scientific standards, we have established a board of internationally renowned professors in financial economics. The Scientific Advisory Board will play a key role in promoting the NFI’s objectives.

The board is chaired by Professor Richard C. Green. Green is Professor of Financial Economics at the Tepper School of Business at Carnegie Mellon University. He has been the editor of the two top-ranked journals in finance, the Review of Financial Studies and the Journal of Finance. He was the President of the American Finance Association. That is one of the highest recognitions possible among peers. His research interests are pricing of financial assets and effects of risk and taxes on financial asset returns and corporate decision-making.

The other members of the board are Per Strömberg and Annette Vissing-Jørgensen.  Per Strömberg is the Director of the Institute for Financial Research (SIFR) and Professor of Finance at the Stockholm School of Economics. He is also an Adjunct Professor of Finance at the Booth School of Business at the University of Chicago. His research has primarily focused on the two areas of bankruptcy and private equity finance. Annette Vissing-Jørgensen is Professor of Finance at the Kellogg School of Management at Northwestern University. Her research covers household portfolio choice, stock market participation, returns to entrepreneurial investment and corporate governance.

The research interests of the members of the Scientific Advisory Board are of direct relevance to the fund’s management and what we hope to achieve through the NFI. We are very excited to have these three with us in the initial phase of establishing and building the NFI.

The two core activities of the NFI will initially be to support training of PhD students and to provide an incentive-based scheme to further enable academic institutions in Norway to compete in the international market for talent. Support for graduate students will come in the form of incentives to coordinate PhD programmes in financial economics in Norway, as well as to support PhD students at top-ranked international programs.  We believe such incentives will stimulate excellence in future financial research and teaching in Norway.

NBIM aims to strengthen its ties with the academic community through various initiatives. These may include a visiting scholar programme at NBIM, research seminars, research conferences and occasional academic courses that will be organised under the NFI. NBIM will also expand its internal research capacity to support the development of investment processes and strategies that are long-term oriented and scalable.

Our goal is to make the financial research conference an annual event. I thank you all for taking part in today’s conference and welcome you to visit the NFI website for updates on our activities going forward.