GOVERNMENT PENSION FUND GLOBAL ANNUAL REPORT 2017

Transcription

1 GOVERNMENT PENSION FUND GLOBAL ANNUAL REPORT 217

2 8,488 billion kroner in the fund Market value as at Billions of kroner 8,488 9, 8, 7, Value Percentage share Equity investments 5, Fixed-income investments 2, Real estate investments , 8, 7, 6, 6, Fixed income 5, 4, 5, 4, Real estate 3, 2, 3, 2, Equity 1, 1, Source: Norges Bank Investment Management 2

3 Inflow / outflow After management fees. Billions of kroner Inflow/outflow 1 1 Average inflow since Source: Norges Bank Investment Management 3

4 1,28 billion kroner return in 217 Accumulated market value as at Billions of kroner 9, 8, 1,4 9, 8, 7, 7, 6, 6, Kronekurs 5, 4, 4,151 5, 4, Avkastning 3, 2, 1, 3,298 3, 2, 1, Tilførsel (etter forvaltningsgodtgjøring) -1, , Source: Norges Bank Investment Management 4

5 3 out of 4 kroner of return past five years Accumulated return as at Billions of kroner 4,5 4, 3,5 3, 2,5 2, 1,5 1, Source: Norges Bank Investment Management 4,151 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5-5 5

6 Change in market value Annual change in market value. Billions of kroner 1,5 1,5 1, 1, Krone rate 5 5 Return Inflow -5-5 Total -1, Source: Norges Bank Investment Management -1, 6

7 Change in market value in different currencies NOK, USD and EUR. Billion currency units 1,1 11, 1, 1, , 8, 7, 6, USD (left axis) EUR (left axis) NOK (right axis) 5 5, 4 4, Source: Norges Bank Investment Management 3, 7

8 13.7 percent return Annual return. Percent % % Annual return -1 4Q % % -1 Accumulated annualised return since Last 1 years 6.2% Since % Source: Norges Bank Investment Management 8

9 Good return in all asset classes Measured in the fund s currency basket. Percent Equity Fixed income Real estate Equity investments 19.4 % 8.7 % Fixed-income investments 3.3 % 4.3 % Unlisted real estate investments 7.5 %.8 % Total 13.7 % 6.9 % Source: Norges Bank Investment Management

10 Good return on the fund Key figures measured in the currency basket. Annualised. Percent 217 Past 5 years Past 1 years Since Return on fund Annual inflation Annual management fees Annual net real return Source: Norges Bank Investment Management 1

11 Total return Billions of kroner 4,5 4, 4,151 4,5 4, 3,5 3,5 Actual return 3, 2,961 3, 2,5 2,284 2,5 4% real return 2, 2, 1,5 1,5 3% real return 1, 1, Source: Norges Bank Investment Management 11

12 28 billion kroner in cash flow in 217 Annual. Billions of kroner Unlisted real estate Fixed income Equity Source: Norges Bank Investment Management 12

13 Cash flow make up 2.4 percent of fund value Billions of kroner (left axis) and percent of fund (right axis) Unlisted real estate Fixed income Equity Share of fund value Source: Norges Bank Investment Management 13

14 Positive relative return Annual relative return of the fund. Percentage points % 2 1 Annual relative return.28 % Q % % Past 1 years.15 % Accumulated annualised relative return -4 Since % Source: Norges Bank Investment Management 14

15 Positive contribution from all strategies in 217 Contribution. Percentage points Strategy 217 Last five years Fund allocation Security selection.4.14 Asset management.8.22 Total.7.29 Source: Norges Bank Investment Management 15

16 We have to expect large value fluctuations Expected volatility. Billion kroner (left axis) and percent (right axis) Risk measued in kroner Risk measured in percent Dec Dec Dec 17 Source: Norges Bank Investment Management 16

17 We have to expect even large value fluctuations Billion kroner (left axis) and percent (right axis) Risk measured in kroner (left axis) Risk measured in percent (right axis) Source: Norges Bank Investment Management 17

18 FINANCIAL MARKETS IN

19 Equity markets in 217 Measured in USD (Stoxx in EUR). Indexed ( = 1) FTSE Global All Cap (global) S&P 5 (USA) Stoxx Europe 6 (Europe, EUR) Stoxx Europe 6 (Europe, USD) MSCI Asia Pacific (Asia) 4Q % 6.6%.6% 2.5% 8.2% % 21.8% 11.2% 26.7% 32.% FTSE Global All Cap (global) Stoxx Europe 6 (Europe, EUR) MSCI Asia Pacific (Asia) S&P 5 (USA) Stoxx Europe 6 (Europe, USD) 9 9 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Source: Bloomberg 19

20 Emerging equity markets in 217 Measured in USD. Indexed total return ( = 1) FTSE All Cap FTSE EM 4Q % 7.% % 32.4% FTSE All Cap FTSE EM Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Source: Bloomberg 2

21 Emerging equity markets last 5 years Measured in USD. Indexed total return ( = 1) Last 5 years (annualised) FTSE All Cap FTSE EM 11.5% 4.4% % 32.4% FTSE All Cap FTSE EM des. 12 des. 13 des. 14 des. 15 des. 16 des. 17 Kilde: Bloomberg 21

22 Different stock sectors in 217 Measured in USD. Indexed total return ( = 1) 15 Technology Basic materials Industrials Telecom Oil and gas Q % 8.3% 5.5% 1.9% 6.8% % 31.4% 28.2% 7.9% 6.4% Basic materials Industrials Telecom Technology 1 1 Oil and gas Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Source: FTSE 22

23 Different stock sectors 213 to 217 Measured in USD. Indexed total return ( = 1) 275 Technology Basic materials Industrials Health care Oil and gas % 31.4% 28.2% 22.7% 6.4% 5 years (annualised) 19.5% 4.4% 13.4% 15.1%.9% Basic materials Industrials Health care Technology 1 1 Oil and gas Source: FTSE 23

24 Negative real interest rates Inflation-linked government bonds. 1 years to maturity. Percent US Germany UK USA Germany United Kingdom Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Source: Bloomberg 24

25 Still large holdings with negative rates Percent of fixed-income investments 25% 25% 2% 2% 15% 15% 1% 1% 5% 5% % % Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Source: Norges Bank Investment Management 25

26 Currency markets in 217 Measured against USD. Indexed ( = 1)* EUR GBP 1 1 JPY 95 EUR GBP JPY 4Q %.8% -.1% % 9.5% 3.5% 9 9 Dec-16 Mar-17 Jun-17 Sep-17 Dec * Declining curve indicates weaker exchange rate against USD Source: WM Reuters 26

27 Currency markets in 217 Emerging markets. Measured against USD. Indexed ( = 1)* 13 BRL RUB MXN CNY TRY 13 4Q %.% -7.2% 2.% -6.2% % 6.% 5.3% 6.7% -7.2% 12 Brazil Russia Mexico 1 1 China Turkey Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 * Declining curve indicates weaker exchange rate against USD Source: WM Reuters 27

28 Unlisted real estate investments Billions of kroner New investments Total market value at year end Source: Norges Bank Investment Management 28

29 New real estate investments in 217 Five largest Location Share (percent) Transaction amount (local currency) Transaction amount (NOK) Five properties in Omotesando, Tokyo 7. JPY 92.8 billion 6.8 billion 6-8 boulevard Haussmann, Paris 1. EUR billion 4.3 billion Schützenstrasse 26, Berlin 1. EUR 425. billion 4. billion 375 Hudson Street, New York 48. USD 223. billion 1.8 billion 111 New York Avenue NW, Washington, D.C. 49. USD 19.8 billion 1.6 billion 29

30 New real estate investments in Piccadilly, London Oxford Street, 1 to 4 Princes Street, London 9 16th Street, NW, Washington, D.C. 111 New York Avenue, NW, Washington, D.C. Schützenstrasse 26, Berlin 6-8 boulevard Haussmann, Paris 375 Hudson Street, New York 2 Air Street, London Minami- Aoyama, Minato, Tokyo Jingumae, Shibuya, Tokyo Minami- Aoyama, Minato, Tokyo Jingumae, Shibuya, Tokyo Jingumae, Shibuya, Tokyo

31 Responsible investment

32 Stable internal management costs Management costs. Basis points Management costs Internal management costs Internal management costs, excl. unlisted real estate Source: Norges Bank Investment Management 32

33 Five new members of the fund s leader groups Per Løken Chief Investment Officer US NBREM Romain Veber Chief Investment Officer Europe NBREM Hege Gjerde Chief Financial Officer NBIM Sirine Fodstad Chief HR Officer NBIM Carine Smith Ihenacho Chief Corporate Governance Officer NBIM 33

34 New publications in

35 Published on website 27 February Holding lists GIPS report Monthly returns Main external service providers Overview of external managers Detailed tables on return and risk Approved issuers of government bonds 35

36 Comprehensive reporting Press conference annual report February 218 Additional information on responsible investment February 218 Additional information on return and risk March 218 Additional information on real estate investments Mars

37 Public information available on our website Submissions to the Ministry of Finance Investment advice Discussion notes Analyses that may form the basis for the fund s investment strategy and advice to the Ministry of Finance Asset manager perspectives The fund s views and reflections on issues topical for the financial industry Expectations documents The fund s expectations to companies regarding specific focus areas Position papers The fund s position on specific ownership topics Public reports 37

38 Highlights The return was 13.7 percent in 217 Equity 19.4 percent Fixed income 3.3 percent Unlisted real estate 7.5 percent The return on the fund was 1,28 billion kroner The return on equity and fixed-income investments was.7 percentage point higher than the return on the benchmark index The market value of the fund grew to 8,488 billion kroner Asset allocation at the end of the year: Equity 66.6 percent Fixed income 3.8 percent Unlisted real estate 2.6 percent 38

39 GOVERNMENT PENSION FUND GLOBAL ANNUAL REPORT 217