FOLKETRYGDFONDET IN NORWAY AND THE NORDIC REGION
Folketrygdfondet's investment of the Government Pension Fund Norway is allocated as follows:
The management of the Government Pension Fund Norway follows clear rules laid out in the mandate given by the Ministry of Finance. The strategic benchmark stipulates a 60% allocation to equities and 40% to fixed income, with a regional split of 85% in Norway and 15% across the rest of the Nordic region.
The highest permitted ownership interest in a single company is 15% in Norway and 5% in the other Nordic countries.
The Government Pension Fund Norway is managed counter-cyclically, i.e. we trade against the market trend during periods of major price fluctuations. This follows from the mandate, and is an important aspect of Folketrygdfondet’s assignment. The purpose of rebalancing the portfolio is to prevent the asset allocation from deviating too much from the strategic benchmark, but this mechanism is also judged to have a stabilising effect on financial markets and has also proven to be profitable..
The benchmark index specified by the Ministry of Finance is used both to manage risk and to measure results.
When evaluating Folketrygdfondet, the Ministry emphasises the financial returns achieved over time relative to the benchmark. This deviation may not exceed three percentage points over a 12 month horizon.
Within these risk limits, Folketrygdfondet may engage in active management by composing a portfolio that deviates from the benchmark portfolio.
"..rebalancing is somewhat countercyclical in nature, inasmuch as the Fund will be adding to its holdings in the asset class whose value has declined in relative terms.."
Meld. St. 27 (2012–2013) The Management of the Government Pension Fund in 2012