GOVERNMENT PENSION FUND GLOBAL ANNUAL REPORT 215 PRESS CONFERENCE OSLO, 9 MARCH 216
Market value As at 31.12.215. Billions of kroner 8, 7, Value Percentage share Equity investments 4,572 61.2 Fixed-income investments 2,668 35.7 7,475 8, 7, 6, 5, Real estate investments 235 3.1 6, 5, Real estate investments 4, 4, Fixed-income investment 3, 3, 2, 2, Equity investments 1, 1, 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 2
Inflows Billions of kroner 5 5 4 4 3 3 Inflow 2 187 2 Average inflow since 1998 1 1 42 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 3
Inflows and return Billions of kroner 1,2 1,2 8 8 4 4 334 Return 42 Inflows -4-4 -8 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15-8 4
Accumulated return As at 31.12.215. Billions of kroner 3, 2,676 3, 2,5 2,5 2, 2, 1,5 1,5 1, 1, Return 5 5-5 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16-5 5
Annual change in market value Billions of kroner 1,5 1,5 1, 1, Krone rate 5 5 Return Inflows -5-5 Total -1, 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15-1, 6
Accumulated market value As at 31.12.215. Billions of kroner 8, 2,676 8, 7, 7, 6, 6, 5, 1,331 5, Return 4, 3, 4, 3, Krone rate 2, 1, 3,468 2, 1, Inflow (after management costs) -1, 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16-1, 7
Annual return Percent 3 3 2 2 1 5.6% 1 Annual return -1 2.7% -1 Accumulated annualised return since 1998 4Q 215 3.6 % -2 215 2.7 % Last 1 years 5.3 % -2 Since 1998 5.6 % -3 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15-3 8
Historical key figures Measured in the fund s currency basket. Percent 215 Last ten years Since 1.1.1998 Gross annual return 2.74 5.34 5.64 Annual inflation.86 1.84 1.78 Annual management costs.6.9.9 Annual net real return 1.8 3.35 3.7 9
Relative return Percentage points 5 5 4 4 3 3 2 1.45 2 1 Annual relative return -1-2 4Q 215.11 % -1-2 Accumulated annualised relative return -3 215.45 % Last 1 years.6 % -3-4 Since 1998.26 % -4-5 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15-5 1
Decomposition of relative return 215. Contributions. Percentage points Total.45 Equity investments.52 Fixed-income investments -.1 11
Contributions to relative return 31.12.215. Strategies measured stand alone. Percentage points Strategy Equity Fixedincome Cross Asset Allocation Total Internal Reference Portfolio.5 -.17. -.12 Allocation.1.1.4.15 Securities Selection.21.3.24 Asset Management.17.3 -.1.18 Total.52 -.1.2.45 12
Expected absolute volatility Billions of kroner (left axis) and percent (right axis) 9 16. 8 7 776 14. 12. 6 5 4 3 2 8.2 527 1.4 1. 8. 6. 4. Risk measured in kroner Risk measured in percent 1 2. 31. dec. 14 31. dec. 15. 13
FINANCIAL MARKETS IN 215 14
Price developments in equity markets Measured in USD (Stoxx in EUR). Indexed (31.12.214 = 1) 125 125 12 12 115 11 115 11 FTSE Global All Cap (global) 15 1 95 9 85 FTSE Global All Cap (global) S&P 5 (USA) Stoxx Europe 6 (Europe) MSCI Asia Pacific (Asia) 4Q 215 5 % 6 % 5 % 7 % 215-4 % -1 % 7 % -4 % 15 1 95 9 85 Stoxx Europe 6 (Europe) MSCI Asia Pacific (Asia) S&P 5 (US) 8 8 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Source: Bloomberg 15
Price developments in emerging equity markets Measured in USD. Indexed (31.12.214 = 1) 115 115 11 11 15 15 1 95 1 95 FTSE EM 9 9 S&P 5 85 8 S&P 5 FTSE EM 4Q 215 6 % % 215-1 % -18 % 85 8 75 75 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Source: Bloomberg 16
Equity markets in China and Brazil Measured in local currency. Indexed (31.12.214 = 1) 175 175 15 125 1 15 125 1 Shanghai Stock Exchange Composite Index Hong Kong Hang Seng Index 75 Shanghai Hong Kong São Paulo 4Q 215 16 % 5 % -4 % 215 9 % -7 % -13 % 5 5 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 75 Ibovespa Brasil Sao Paulo Stock Exchange Index Source: Bloomberg 17
Price development in stock sectors Measured in USD. Indexed (31.12.214 = 1) 13 13 12 11 1 12 11 1 Health Consumer goods Materials 9 8 Health Consumer goods Materials Oil and gas Technology Utilities 4Q 215 7 % 6 % 3 % % 8 % 1 % 215 8 % 5 % -17 % -22 % 3 % -7 % 7 7 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 9 8 Oil and gas Technology Utilities Source: FTSE 18
Low interest rates 1-year government bonds. Percent 5 4 Germany US Japan UK Spain Italy 31.12.215.6 % 2.3 %.3 % 2. % 1.8 % 1.6 % 3.9.215.6 % 2. %.4 % 1.8 % 1.9 % 1.6 % 31.12.214.5 % 2.2 %.3 % 1.8 % 1.6 % 1.9 % 5 4 3 2 1 3 2 1 Germany US Japan UK Spain Italy -1-1 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Source: Bloomberg 19
Two year government bond yields Increasing in the US, decreasing in Germany. Percent 1.25 1.25 1. 1..75.75.5.25. -.25.5.25. -.25 US Germany Japan -.5 -.5 -.75 -.75 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Source: Bloomberg 2
Price developments for fixed-income sectors Measured in USD. Indexed (31.12.214 = 1) 15 15 1 95 1 95 Government bonds Government related bonds Inflationlinked bonds Securitised debt Government bonds Government related bonds Corporate bonds Inflationlinked bonds Securitised debt 4Q 215-1 % -1 % -1 % -2 % -1 % 215-3 % -5 % -4 % -5 % -1 % 9 9 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Corporate bonds Source: Barclays 21
Currency development Weaker EUR, CHF and CNY in 215 1.3 6. 1.2 1.1 1..9 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 7. USD/EUR (left axis) CHF/EUR (left axis) CNY/USD (right axis) Source: Bloomberg 22
Currency development emerging markets Measured against USD. Indexed (31.12.214 = 1)* 15 BRL RUB INR TRY CNY 15 4Q 215 1 % -1 % -1 % 4 % -2 % 125 215-33 % -18 % -5 % -2 % -4 % 125 Brazil India 1 1 Turkey China Russia 75 75 5 5 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 *Falling curve implies a weaker currency measured against USD Source: Bloomberg 23
New real estate investments in 215 1 transactions in total US 7 transactions Total value 36,5 bn NOK. UK 2 transactions Total value 5,9 bn NOK. Europe 1 transaction Total value 1,3 bn NOK. 24
Real estate investments Market value at year end in billion kroner 25 235 25 2 2 15 141 15 Listed real estate investments 1 1 Unlisted real estate investments 5 25 52 5 11 211 212 213 214 215 25
Real estate portfolio as at 31.12.215 Currency and sector distribution CHF 3.8 % Other 2.1 % SEK.2 % Listed real estate investments 23. % EUR 21.8 % USD 44.3 % Other*.8 % Office 48. % GBP 27.6 % Logistics 18.8 % Retail 9.4 % * Bank deposits and other claims 26
Responsible investment 215 We worked on standard setting We voted at 11,562 general meetings We had 3,52 meetings with companies 27
Observation and exclusions in 215 Changes from 31.12.214 to 31.12.215 Exclusions Daewoo International Corp POSCO Genting Berhad IJM Corporation ZTE Corp Observation PT Astra International Tbk 28
Risk-based divestments Main category Theme 215 GHG-emissions Deforestation Water Social and governance Oil sands Coal extraction towards electricity production Cement production Coal-fired power generation Other Palm oil production in Malaysia and Indonesia Coal mining in Indonesia Coal mining in India Pulp and paper Gold mining General mining and precious metals Mountain-top removal Heavy construction Corruption Other 11 8 16 7 2 1 4 9 9 5 1 214 and earlier 5 14 2 1 27 11 5 16 17 2 14 73 114 29
Environment-related mandates Investments in 224 companies Main category Sub-groups Number of companies Total (billion NOK) Low-emission energy & alternative fuels Renewable energy Low-emission energy Low-emission fuels 54 19 14 6.7 1.9 1.5 Clean energy & efficiency technology Electricity production Transport Buildings Industry 3 1 9 45 1.2 3.5 5.4 8.2 Natural resource management Water Waste management and emissions reduction Sustainable agriculture 35 9 7 8.8 3.6 2.5 Other 19 1.5* 224 53.8 *Includes cash 3
Management costs Basis points 16 16 14 14 12 1 12 1 Management costs 8 6 4 5.7 4.8 8 6 4 Management costs excluding performancebased fees 2 2 3 4 5 6 7 8 9 1 11 12 13 14 15 31
Market value and management costs Fees in million currency units 8 7 Market value NOK Costs NOK Costs USD Change 214-215 29 % 23 % -4 % 8, 7, Market value* (bnnok, right axis) 6 6, 5 5, Costs (millnok, right axis) 4 4, 3 3, Costs (millusd, left axis) 2 2, 1 1, 3 4 5 6 7 8 9 1 11 12 13 14 15 * Average market value in respective year 32
Number of employees by office Number as at 31.12.215* 6 518 6 Shanghai 5 5 Singapore 4 4 New York London 3 3 Oslo 2 2 1 1 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 Excl employees in subsidiaries 33
Number of employees Number as at 31.12.215* 6 6 5 14 5 4 3 414 4 3 Norges Bank Real Estate Management 2 2 Norges Bank Investment Management 1 1 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 Excl employees in subsidiaries 34
Submissions, documents and reports Categories Submissions to the Ministry of Finance Advice on the fund s investments Discussion notes Analysis which may form relevant background for investment strategy and advice to asset owner Asset manager perspective Views and reflections on issues topical for the financial industry Expectation documents The fund s expectations to companies within focus areas Position papers The fund s view on special topics within our ownership work Public reports 35
Reports Annual report press conference 9 March 216 Report on performance and risk press seminar 16 March 216 Report on unlisted real estate investments press seminar 13 April 216 36
Main points The return was 2.7 percent in 215 Equity Fixed income Real estate 3.8 percent.3 percent 1. percent The return on equity and fixed-income investments was.5 percentage point higher than the return on the reference indices The market value of the fund grew by 1,44 billion kroner to 7,475 billion kroner Asset allocation at the end of the year: Equity Fixed income Real estate 61.2 percent 35.7 percent 3.1 percent 37
GOVERNMENT PENSION FUND GLOBAL ANNUAL REPORT 215 PRESS CONFERENCE OSLO, 9 MARCH 216