The Government Pension Fund Global

Karl Johans gate, Oslo, Norway (Photo: R. Wottrich)

The Government Pension Fund Global (Norwegian: Statens pensjonsfond Utland, SPU) is the Norwegian sovereign wealth fund created from Norwegian petroleum production. The fund changed its name in January 2006 from The Petroleum Fund of Norway. The fund is known in Norway as The Oil Fund (Norwegian: Oljefondet) [hereinafter “Fund”].

One of the largest such funds in the world, as of March 2017 its total value is NOK 7.75 trillion (USD 892 billion), holding .8 percent of global equity markets. With 2.33 percent of European stocks, it is said to be the largest stock owner in Europe. (Wikipedia) The Fund averages 1.3 percent ownership of every listed company in the world, and has become an active investor in recent years to influence company behavior.

The Fund voted against company-backed resolutions by half of its top 50 holdings in 2016 and joined a class-action lawsuit against Volkswagen over its emissions scandal. The Fund also claimed partial credit for an increase in the number of U.S. companies offering proxy access, as well as governance changes in Brazil, Japan and Sweden.

The Fund distributes earnings in Norway and to Norwegian enterprises deemed constructive to the country. The domestic Fund is managed by the Folketrygdfondet. The global investment Fund is managed by Norges Bank Investment Management (NBIM), part of the Norwegian Central Bank on the behalf of the Ministry of Finance. It is currently the largest pension Fund in Europe and is larger than the California public-employees’ pension fund (CalPERS). The Fund is estimated to be at its peak and it is expected to decline as future Norwegian oil production drops.

The Fund is enormous when compared to the small population of Norway – at just over 5 million people. This inevitably makes the Fund a political target. Major issues within Norway revolve around; 1. Whether the Fund should supplement the state budget; 2. Whether the Fund’s stock exposure at ~65 percent is financially safe; and, 3. Whether the investment policy of the Fund is ethical (past investments in arms production, tobacco and fossil fuels).

In short, it is safe to say that as goes the Fund, so goes Norway.

Richard L. Wottrich, Atlanta USA