Norway SWF to retain US assets


Norway's sovereign wealth fund makes long-term investment decisions and it is likely to keep assets in US Treasuries, despite recent fears about the US economic outlook, a finance ministry official said on Monday.

"We have spread our risks very broadly, we have invested about 1/3 of our total fund in the US, in bonds and equities, globally that has been a constant over the last 10 years," said Michael Skancke, director general in the asset management department of the Ministry of Finance.

"These portions have been stable for a very long time, they are not influenced by short-term market movements but by very long-term considerations," he told reporters on the sidelines of a conference in London. South Korea's National Pension Service, the world's fifth-biggest pension fund, said on Thursday it was shying away from US Treasuries because of falling yields and the weakening dollar.

Skancke said Norway's $390 billion fund, which issues its annual report later this week, made a total return in real terms after inflation of 4.6 per cent over the past 10 years, which he said reflected "relatively low risk in the portfolio".

The fund said last year it was increasing the equity portion in its portfolio.

"That has not yet been fully implemented," Skancke said.

"In the last 10 years, there have been many falling risk-free investments. We, just like other investors, have to increase risk to generate the same performance as 10 years ago."

Sovereign wealth funds, with assets of over $2 trillion, have shot up to the main stage of global financial markets as they poured tens of billions of dollars into banks hit by the US mortgage debacle.

Last October, finance ministers from the Group of Seven rich countries asked the International Monetary Fund and the OECD to examine best practices for sovereign wealth funds and their recipient countries.