The fund’s long-term return is dependent on sustainable growth, well-functioning markets and good corporate governance. We seek to improve the long-term economic performance of our investments, and to reduce the financial risks associated with the environmental and social practices of companies in our portfolio. We do this by considering governance and sustainability issues that could have an impact on the fund’s performance over time. We integrate these issues into our work on establishing principles, our long-term ownership and our investing.
The fund invests for the long term
The fund exists to help finance the Norwegian welfare state for future generations and must therefore have a long investment horizon. We are dependent on sustainable development for a long-term return. We have an interest in companies being able to meet the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable development can make the companies in our portfolio more robust and contribute to the fund’s long-term return.
The fund invests globally
The fund has holdings in 70 countries to spread risk and capture global growth. We benefit from free and open markets that enable global value creation and efficient allocation of resources. We trade daily in global securities markets. Well-functioning markets ensure that capital is channelled effectively from investors to companies. We have a clear interest in regulation that results in better information on markets and companies, and makes markets more stable. Markets that are less prone to shocks and facilitate sustainable growth are important for the fund’s long-term return.
The fund invests widely
The fund has holdings in around 9,000 companies spanning every sector. However, the fund’s percentage holdings in these companies are small, so we must delegate responsibility to their boards. We expect boards to set the company’s strategy, oversee management and be accountable to shareholders. Good corporate governance promotes transparency and protects our rights as an investor. Good governance also breeds confidence in the markets and contributes to long-term value creation. The future value of the fund is dependent on the value created by the companies in which we invest.