Government Pension Fund Global Annual report 218 Oslo, 27 February 219
8,256 billion kroner in the fund Market value as at 31.12.218. Billions of kroner 9, Value Percentage share 8,256 9, 8, Equity investments 5,477 66.3 Real estate investments 246 3. 8, 7, 6, Fixed-income investments 2,533 3.7 7, 6, Fixed income 5, 4, 5, 4, Real estate 3, 3, Equity 2, 2, 1, 1, 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 2
Inflow again in 218 Before management fees. Billions of kroner 4 4 3 3 2 155 2 Inflow/outflow 1 34 1 Average inflow since 1998-1 -1-2 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18-2 3
3,666 billion kroner in total return As at 31.12.218. Billions of kroner 9, 1,263 9, 8, 8, 7, 7, 6, 5, 3,666 6, 5, Krone rate 4, 3, 4, 3, Return 2, 1, 3,327 2, 1, Inflow (after management costs) -1, 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18-1, 4
Return of -485 billion kroner in 218 Accumulated return as at 31.12.218. Billions of kroner 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 3,666 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5-5 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18-5 5
-6.1 percent return in 218 Measured in the fund s currency basket. Percent 3 3 2 2 1 1 5.5% Annual return -1-6.1% -1 Accumulated annualised return since 1998-2 -3 4Q 218-8.3% 218-6.1% Since 1998 5.5% 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18-2 -3 6
-9.5 percent in equity return in 218 Measured in the fund s currency basket. Percent 5 5 4 4 3 3 2 2 1 1 Aksjer -1-1 Eiendom -2-3 -4-5 217 218 Equity investments 19.4% -9.5% Fixed-income investments 3.3%.6% Unlisted real estate investments 7.5% 7.5% Totalt 13.7% -6.1% 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18-2 -3-4 -5 Renter 7
The fund s real return Key figures measured in the currency basket. Annualised. Percent 218 Past 5 years Past 1 years Since 1.1.1998 Return on fund -6.1 4.7 8.3 5.5 Annual inflation 1.7 1.4 1.7 1.8 Annual management fees.1.1.1.1 Annual net real return -7.7 3.3 6.5 3.6 8
226 billion kroner in cash flow Billions of kroner 25 25 2 2 15 1 15 1 Fixed income Unlisted real estate Equity 5 5 96 98 2 4 6 8 1 12 14 16 18 9
Negative relative return in 218 Annual relative return of the fund. Percentage points 5 5 4 4 3 3 2 1 2 1 Annual relative return.25% -1-2 -3 4Q 218 -.7% 218 -.3% -.3% -1-2 -3 Accumulated annualised relative return -4 Since 1998.25% -4-5 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18-5 1
Negative contribution from all strategies in 218 Contribution. Since 213 figures are annualised. Percentage points Strategy 218 217 Since 213 Fund allocation -.24.22 -.1 Security selection -.4.4.1 Asset management -.1.8.18 Total -.3.7.18 11
Expected value fluctuations Expected volatility. Billion kroner (left axis) and percent (right axis) 1 9 8 7 6 8 92 71 2 18 16 14 12 Risk measured in kroner 5 4 3 1.6 1.8 8.6 1 8 6 Risk measured in percent 2 4 1 2 31 Dec. 16 31 Dec. 17 31 Dec. 18 12
Value fluctuations in a longer perspective Billion kroner (left axis) and percent (right axis) 5 1 45 9 4 8 35 3 25 77 7 6 5 Risk measured in percent (left axis) 2 4 15 1 5 8.6 3 2 1 Risk measured in kroner (right axis) 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 13
Financial markets in 218 14
Equity markets in 218 Measured in USD. Indexed (31.12.217 = 1) 115 115 11 11 15 15 1 95 1 95 FTSE Global All Cap (global) 9 9 85 85 8 8 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Source: Bloomberg 15
Equity markets in 218 Measured in USD (Stoxx in EUR). Indexed (31.12.217 = 1) 115 11 15 115 11 15 FTSE Global All Cap (global) S&P 5 (USA) 1 95 9 1 95 9 MSCI Asia Pacific (Asia) Stoxx Europe 6 (Europe, EUR) 85 FTSE Global All Cap (global) S&P 5 (USA) MSCI Asia Pacific (Asia) Stoxx Europe 6 (Europe, EUR) Stoxx Europe 6 (Europe, USD) 4Q 218-13.1% -13.5% -11.1% -11.5% -12.8% 218-9.6% -4.4% -13,.% -1.3% -14.6% 8 8 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 85 Stoxx Europe 6 (Europe, USD) Source: Bloomberg 16
Equity markets in 218 and year-to-date Measured in USD (Stoxx in EUR). Indexed (31.12.217 = 1). As at 22.2.219 115 11 15 115 11 15 FTSE Global All Cap (global) S&P 5 (USA) 1 95 9 85 8 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 1 95 9 85 8 MSCI Asia Pacific (Asia) Stoxx Europe 6 (Europe, EUR) Stoxx Europe 6 (Europe, USD) Source: Bloomberg 17
Emerging equity markets in 218 Measured in USD. Indexed (31.12.217 = 1) 115 11 FTSE All Cap FTSE EM 4Q 218-13.1% -6.1% 218-9.6% -13.2% 115 11 15 15 1 95 1 95 FTSE All Cap FTSE EM 9 9 85 85 8 8 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Source: Bloomberg 18
Emerging equity markets in 218 and year-to-date Measured in USD. Indexed (31.12.217 = 1). As at 22.2.219 115 115 11 11 15 1 95 15 1 95 FTSE All Cap FTSE EM 9 9 85 85 8 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 8 Source: Bloomberg 19
Different stock sectors in 218 Measured in USD. Indexed (31.12.217 = 1) 13 Health care Utilities Oil and gas Consumer goods Basic materials 13 12 4Q 218-1.5%.5% -21.1% -1.9% -13.8% 218 2.3% 1.% -13.8% -15.1% -16.5% 12 Basic materials 11 11 Consumer goods 1 1 Utilities Health care 9 9 Oil and gas 8 8 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Source: FTSE 2
Different stock sectors last five years Measured in USD. Indexed (31.12.213 = 1) 275 Technology Health care Utilities Telecommunications Oil and gas 275 25 225 218-4.3% 2.3% 1.% -1.% -13.8% 5 years (annualised) 12.7% 8.7% 6.3%.1% -4.8% 25 225 Technology 2 2 Health care 175 15 175 15 Utilities 125 125 Telecommunications 1 75 1 75 Oil and gas 5 5 213 214 215 216 217 218 Source: FTSE 21
Development 1-year government bond yields Percent 4. 3.5 3. 2.5 2. 1.5 1..5. 4. 3.5 3. 2.5 2. 1.5 1..5. US Germany Japan UK Italy Spain -.5 -.5 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Source: Bloomberg 22
Still large holdings with negative rates Percent of fixed-income investments 25 25 2 2 15 15 1 1 5 5 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 23
Currency markets in 218 Measured against USD. Indexed (31.12.217 = 1)* 11 11 15 15 EUR 1 1 GBP JPY 95 EUR GBP JPY 95 4Q 218-1.6% -2.3% 3.5% 218-4.8% -5.9% 2.7% 9 9 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 * Declining curve indicates weaker exchange rate against USD Source: WM Reuters 24
Currency markets in 218 Emerging markets. Measured against USD. Indexed (31.12.217 = 1)* 13 12 BRL RUB MXN CNY TRY 4Q 218 3.% -5.6% -5.%.2% 12.9% 218-14.4% -17.% -.7% -5.2% -28.7% 13 12 11 1 9 8 7 6 11 1 9 8 7 6 Brazil Russia Mexico China Turkey 5 5 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 * Declining curve indicates weaker exchange rate against USD Source: WM Reuters 25
The real estate portfolio Billions of kroner 35 327 35 3 291 81 3 25 235 242 73 25 2 54 51 2 Listed real estate investments 15 1 5 52 141 33 18 181 191 219 246 15 1 5 Unlisted real estate investments 52 213 214 215 216 217 218 26
Annual real estate investments Billions of kroner 5 44 5 4 37 4 3 2 1 11 15 19 17 14 8 3 2 1 Disposals New investments Total -1 211 212 213 214 215 216 217 218-1 27
New real estate investments in 218 Office and retail Location Share (percent) Transaction amount (local currency) Transaction amount (NOK) 3 Warwick Street 25. GBP 28.8 million.3 billion 6 Holborn Viaduct 1. GBP 321.3 million 3.4 billion 54-56 rue la Boétie 1. EUR 415.5 million 4 billion 79 avenue des Champs-Elysées 1. EUR 613. million 6 billion 51 Boylston Street 49.9 USD 29.9 million 2.5 billion 121 Seaport Boulevard 45. USD 24.8 million 1.7 billion 28
New real estate investments in 218 3 Warwick Street, London 6 Holborn Viaduct, London 54-56 rue la Boétie, Paris 79 avenue des Champs-Elysées, Paris 51 Boylston Street, Boston 121 Seaport Boulevard, Boston 29
Responsible investment 218 Environmental Social Governance 3
Stable internal management costs Management cost. Basis points 16 16 14 14 12 12 1 1 Management cost 8 8 Internal management costs 6 4 5.4 3.8 6 4 Internal management costs, excl. unlisted real estate 2 3.2 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 31
Costs Millions of kroner 218 217 Salary, social security and other personnel-related costs 1,262 1,325 Custody costs 385 44 IT services, systems, data and information 651 657 Other costs 849 664 Base fees to external managers 724 755 Management fee excl. performance-based fees 3,872 3,84 Performance-based fees to external managers 673 924 Management fee 4,544 4,728 32
Published on website 27 February 218 www.nbim.no Holding list GIPS report Monthly returns Main external service providers Overview of external managers Detailed tables on return and risk Approved issuers of government bonds 33
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 Public reports The fund s position on specific ownership topics 34
Highlights The return was -6.1 percent in 218 Equity -9.5 percent Unlisted real estate 7.5 percent Fixed income.6 percent The return on the fund was -485 billion kroner The return on equity and fixed-income investments was.3 percentage point lower than the return on the benchmark index The market value of the fund fell to 8,256 billion kroner Asset allocation at the end of the year Equity 66.3 percent Unlisted real estate 3. percent Fixed income 3.7 percent 35
Government Pension Fund Global Annual report 218