Norway's Pension Fund Global

The Norway Pension Fund Global (NPFG), established in 1996, is the largest sovereign wealth fund in the world, capitalized by the country's petroleum revenues. By the end of 2013, it was valued at 5.4 trillion Norwegian kroner (USD 864 billion), equivalent to approximately USD 172,000 for each Norwegian citizen. The fund, managed by Norges Bank Investment Management, primarily invests in publicly traded securities outside Norway, following strict investment guidelines set by the Ministry of Finance to safeguard against currency volatility and political misuse.

With a change of government, 2013 proved pivotal for the fund as the new prime minister, Erna Solberg, insisted on structural and policy reviews for the fund. There were discussions about splitting the fund to enhance its management efficiency. Concerns about the fund’s investment strategy, the method of executing this strategy, and the role of ethical investment principles came to the fore. Additionally, the government considered larger withdrawals to support new public priorities like infrastructure and social welfare.

Pension fund managers had to grapple with questions regarding optimal investment strategies—whether to maintain current allocations or diversify further. Furthermore, they needed to decide on the balance between in-house expertise and outsourced investment management, and the extent of ethical considerations in investment decisions.