This is Folketrygdfondet
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Folketrygdfondet is an active, responsible, and long-term investor that manages the Government Pension Fund Norway (GPFN) and the Government Fund Tromsø (GFT), which is under establishment. The goal is the highest possible return over time.
Folketrygdfondet has several missions. In addition to managing Norway's public financial assets and creating value for current and future generations, Folketrygdfondet aims to stabilize the Norwegian financial market and contribute to well-functioning markets. On two occasions, the mission of managing the Government Bond Fund (GBF) has been assigned to Folketrygdfondet.
Folketrygdfondet is the largest institutional investor on Oslo Stock Exchange, accounting for about 11 percent of the main index. The capital is also invested in Sweden, Denmark, and Finland, and is invested in both equity and fixed income.
The benchmark index set by the Ministry of Finance has 60 percent in equities and 40 percent in fixed income, distributed with 85 percent in Norway and 15 percent in the rest of the Nordic region.
Folketrygdfondet in brief
Folketrygdfondet was established in 1967 to manage the surpluses in the National Insurance scheme (folketrygden). During the first twelve years, NOK 11.8 billion was transferred to the fund, but as social security benefits increased beyond the 70s, there was no surplus to deposit into the fund. 1979 was the last year with capital inflow, and except for the termination of the account loan scheme of about NOK 100 billion in 2006, no capital has been withdrawn. However, in June 2024, the Norwegian Parliament decided to start annual withdrawals of 3 percent from 2025 to finance the national budget.
Mission
Folketrygdfondet's mission is to be a responsible manager of public financial values. We aim to ensure good returns over time and contribute to the state's long-term savings, as well as stabilize the Norwegian financial market.
In the Norwegian market, Folketrygdfondet is a major player, and the mandate gives Folketrygdfondet a role beyond just ensuring good returns. To be able to create good returns over time, Folketrygdfondet must exercise long-term and responsible investment activities, and we have an interest in the financial markets functioning effectively.
Folketrygdfondet contributes to value creation and development in the Norwegian business sector:
- with capital to the companies
- with responsible ownership practices in the companies
- with measures for good "rules of conduct" and well-functioning markets
- by being long-term and stabilizing in the capital markets
Investment Strategy
Folketrygdfondet's management is based on the principles of the highest possible return and low costs. The investment strategy reflects our uniqueness as a large and long-term investor, and we use our characteristics and advantages to create good returns over time.
Our mandate sets the framework for how much risk should be taken in management. Central to this is the strategic benchmark index, which consists of 60 percent equities and 40 percent fixed income, distributed with 85 percent in Norway and 15 percent in other Nordic countries. A rebalancing mechanism has also been established to ensure that the stock portion remains stable over time and makes us act counter-cyclically and stabilizing in the markets.
Folketrygdfondet is an active financial investor that maximizes returns over time through work along two main lines:
- Raising the market's overall return. By being an active and responsible owner and creditor, we aim to strengthen the companies' profitability and contribute to well-functioning markets.
- Creating excess returns in our own portfolio compared to the broad market. Excess returns should be created along several axes in line with our advantages, and risk-taking will vary over time depending on investment opportunities.
An important part of the mission is to manage the capital cost-effectively. On behalf of the Ministry of Finance, an annual report is prepared by Canadian CEM Benchmarking, which shows that Folketrygdfondet's management costs related to Government Pension Fund Norway are lower than all comparable funds globally. The report has had similar conclusion for several years.