GOVERNMENT PENSION FUND GLOBAL · 2018-02-27 · 29 Location Share (percent) Transaction amount...
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GOVERNMENT ANNUAL REPORT 2017 PENSION FUND GLOBAL
Transcript of GOVERNMENT PENSION FUND GLOBAL · 2018-02-27 · 29 Location Share (percent) Transaction amount...
GOVERNMENT
ANNUAL REPORT 2017
PENSION FUNDGLOBAL
8,488 billion kroner in the fundMarket value as at 31.12.2017. Billions of kroner
2
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Fixed income
Real estate
Equity
Source: Norges Bank Investment Management
8,488
Value Percentage share
Equity investments 5,653 66.6
Fixed-income investments 2,616 30.8
Real estate investments 219 2.6
Inflow / outflowAfter management fees. Billions of kroner
3
-200
-100
0
100
200
300
400
-200
-100
0
100
200
300
400
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Inflow/outflow
Average inflowsince 1998
159
-65
Source: Norges Bank Investment Management
1,028 billion kroner return in 2017Accumulated market value as at 31.12.2017. Billions of kroner
4
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Kronekurs
Avkastning
Tilførsel (etterforvaltnings-godtgjøring)
Source: Norges Bank Investment Management
4,151
1,040
3,298
3 out of 4 kroner of return past five yearsAccumulated return as at 31.12.2017. Billions of kroner
5
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Source: Norges Bank Investment Management
4,151
Change in market valueAnnual change in market value. Billions of kroner
6
Source: Norges Bank Investment Management
-1,000
-500
0
500
1,000
1,500
-1,000
-500
0
500
1,000
1,500
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Krone rate
Return
Inflow
Total
Change in market value in different currenciesNOK, USD and EUR. Billion currency units
7
Source: Norges Bank Investment Management
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
300
400
500
600
700
800
900
1,000
1,100
12 13 14 15 16 17
USD (left axis)
EUR (left axis)
NOK (right axis)
13.7 percent returnAnnual return. Percent
8
-30
-20
-10
0
10
20
30
-30
-20
-10
0
10
20
30
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Annual return
Accumulatedannualised returnsince 1998
13.7%
Source: Norges Bank Investment Management
4Q 2017 3.5%
2017 13.7%
Last 10 years 6.2%
Since 1998 6.1%
6.1%
-50
-40
-30
-20
-10
0
10
20
30
40
-50
-40
-30
-20
-10
0
10
20
30
40
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Equity
Fixed income
Real estate
Good return in all asset classesMeasured in the fund’s currency basket. Percent
9
2017 2016
Equity investments 19.4 % 8.7 %
Fixed-income investments 3.3 % 4.3 %
Unlisted real estate investments 7.5 % 0.8 %
Total 13.7 % 6.9 %
Source: Norges Bank Investment Management
Good return on the fund
2017 Past 5 years Past 10 years Since 1.1.1998
Return on fund 13.7 9.3 6.2 6.1
Annual inflation 1.8 1.3 1.7 1.8
Annual management fees 0.1 0.1 0.1 0.1
Annual net real return 11.6 7.8 4.4 4.2
Key figures measured in the currency basket. Annualised. Percent
10
Source: Norges Bank Investment Management
Total returnBillions of kroner
11
4,151
2,961
2,284
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
98 00 02 04 06 08 10 12 14 16 18
Actual return
4% real return
3% real return
Source: Norges Bank Investment Management
208 billion kroner in cash flow in 2017Annual. Billions of kroner
12
Source: Norges Bank Investment Management
-
50
100
150
200
250
-
50
100
150
200
250
1716151413121110090807060504030201009998
Unlisted realestate
Fixed income
Equity
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
50
100
150
200
250
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Unlisted real estate
Fixed income
Equity
Share of fund value
Cash flow make up 2.4 percent of fund valueBillions of kroner (left axis) and percent of fund (right axis)
13
Source: Norges Bank Investment Management
Positive relative returnAnnual relative return of the fund. Percentage points
14
-5
-4
-3
-2
-1
0
1
2
3
4
5
-5
-4
-3
-2
-1
0
1
2
3
4
5
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Annual relativereturn
Accumulatedannualisedrelative return
0.70 %
Source: Norges Bank Investment Management
4Q 2017 0.17 %
2017 0.70 %
Past 10 years 0.15 %
Since 1998 0.28 %
0.28 %
Positive contribution from all strategies in 2017Contribution. Percentage points
15
Source: Norges Bank Investment Management
Strategy 2017Last five
years
Fund allocation 0.22 -0.07
Security selection 0.40 0.14
Asset management 0.08 0.22
Total 0.70 0.29
We have to expect large value fluctuationsExpected volatility. Billion kroner (left axis) and percent (right axis)
16
Source: Norges Bank Investment Management
780800
920
10.4 10.6 10.8
0
2
4
6
8
10
12
14
16
18
20
0
100
200
300
400
500
600
700
800
900
1000
31 Dec 15 31 Dec 16 31 Dec 17
Riskmeasued inkroner
Riskmeasured inpercent
920
10.8
0
10
20
30
40
50
0
200
400
600
800
1000
03 05 07 09 11 13 15 17
Riskmeasured inkroner (leftaxis)
Riskmeasured inpercent (rightaxis)
We have to expect even large value fluctuationsBillion kroner (left axis) and percent (right axis)
17
Source: Norges Bank Investment Management
FINANCIAL
MARKETS
IN 2017
18
Equity markets in 2017Measured in USD (Stoxx in EUR). Indexed (31.12.2016 = 100)
19
90
95
100
105
110
115
120
125
130
135
140
90
95
100
105
110
115
120
125
130
135
140
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
FTSE Global All Cap(global)
Stoxx Europe 600(Europe, EUR)
MSCI Asia Pacific(Asia)
S&P 500 (USA)
Stoxx Europe 600(Europe, USD)
FTSE
Global All
Cap
(global)
S&P
500
(USA)
Stoxx
Europe 600
(Europe,
EUR)
Stoxx
Europe
600
(Europe,
USD)
MSCI Asia
Pacific
(Asia)
4Q 2017 5.9% 6.6% 0.6% 2.5% 8.2%
2017 24.3% 21.8% 11.2% 26.7% 32.0%
Source: Bloomberg
Emerging equity markets in 2017Measured in USD. Indexed total return (31.12.2016 = 100)
20
90
100
110
120
130
140
90
100
110
120
130
140
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
FTSE All Cap
FTSE EM
Source: Bloomberg
FTSE All Cap FTSE EM
4Q 2017 5.9% 7.0%
2017 24.3% 32.4%
Emerging equity markets last 5 yearsMeasured in USD. Indexed total return (31.12.2012 = 100)
21
60
80
100
120
140
160
180
200
220
60
80
100
120
140
160
180
200
220
des. 12 des. 13 des. 14 des. 15 des. 16 des. 17
FTSE All Cap
FTSE EM
Kilde: Bloomberg
FTSE All Cap FTSE EM
Last 5 years
(annualised)11.5% 4.4%
2017 24.3% 32.4%
80
90
100
110
120
130
140
150
80
90
100
110
120
130
140
150
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Basic materials
Industrials
Telecom
Technology
Oil and gas
Different stock sectors in 2017Measured in USD. Indexed total return (31.12.2016 = 100)
22
Source: FTSE
Technology Basic materials Industrials Telecom Oil and gas
4Q 2017 8.9% 8.3% 5.5% 1.9% 6.8%
2017 39.3% 31.4% 28.2% 7.9% 6.4%
50
75
100
125
150
175
200
225
250
275
50
75
100
125
150
175
200
225
250
275
2012 2013 2014 2015 2016 2017
Basic materials
Industrials
Health care
Technology
Oil and gas
Different stock sectors 2013 to 2017Measured in USD. Indexed total return (31.12.2012 = 100)
23
Source: FTSE
Technology Basic materials Industrials Health care Oil and gas
2017 39.3% 31.4% 28.2% 22.7% 6.4%
5 years
(annualised)19.5% 4.4% 13.4% 15.1% 0.9%
Negative real interest ratesInflation-linked government bonds. 10 years to maturity. Percent
24Source: Bloomberg
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17
USA
Germany
United Kingdom
US Germany UK
31.12.2017 0.42 -1.08 -1.86
30.06.2017 0.56 -0.74 -1.80
31.12.2016 0.47 -1.14 -1.93
Still large holdings with negative ratesPercent of fixed-income investments
25
0%
5%
10%
15%
20%
25%
0%
5%
10%
15%
20%
25%
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17
Source: Norges Bank Investment Management
90
95
100
105
110
115
120
90
95
100
105
110
115
120
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
EUR
GBP
JPY
Currency markets in 2017Measured against USD. Indexed (31.12.2016 = 100)*
26
EUR GBP JPY
4Q 2017 1.6% 0.8% -0.1%
2017 13.8% 9.5% 3.5%
* Declining curve indicates weaker exchange rate against USD
Source: WM Reuters
80
90
100
110
120
130
80
90
100
110
120
130
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Brazil
Russia
Mexico
China
Turkey
Currency markets in 2017Emerging markets. Measured against USD. Indexed (31.12.2016 = 100)*
27
BRL RUB MXN CNY TRY
4Q 2017 -4.6% 0.0% -7.2% 2.0% -6.2%
2017 -1.9% 6.0% 5.3% 6.7% -7.2%
* Declining curve indicates weaker exchange rate against USD
Source: WM Reuters
19
3844
19 15
52
108
181 191
219
0
50
100
150
200
250
0
50
100
150
200
250
2013 2014 2015 2016 2017
New investments
Total market valueat year end
Unlisted real estate investmentsBillions of kroner
28
Source: Norges Bank Investment Management
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Location
Share
(percent)
Transaction amount
(local currency)
Transaction
amount
(NOK)
Five properties in Omotesando, Tokyo 70.0 JPY 92.8 billion 6.8 billion
6-8 boulevard Haussmann, Paris 100.0 EUR 462.2 billion 4.3 billion
Schützenstrasse 26, Berlin 100.0 EUR 425.0 billion 4.0 billion
375 Hudson Street, New York 48.0 USD 223.0 billion 1.8 billion
1101 New York Avenue NW, Washington, D.C. 49.0 USD 190.8 billion 1.6 billion
New real estate investments in 2017
Five largest
New real estate investments in 2017
10 Piccadilly, London 263-269 Oxford Street, 1 to 4 Princes
Street, London900 16th Street, NW,
Washington, D.C.
1101 New York Avenue, NW,
Washington, D.C.
Schützenstrasse 26, Berlin 6-8 boulevard Haussmann, Paris 375 Hudson
Street, New York
20 Air Street, London
5-3-27 Minami-
Aoyama, Minato,
Tokyo
1-8-10
Jingumae,
Shibuya, Tokyo
5-3-2 Minami-
Aoyama, Minato,
Tokyo
6-31-17 Jingumae,
Shibuya, Tokyo6-12-18 Jingumae,
Shibuya, Tokyo
Responsible investment 2017
31
6.0
3.9
3.3
0
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
03 05 07 09 11 13 15 17
Management costs
Internal management costs
Internal managementcosts, excl. unlisted realestate
Stable internal management costsManagement costs. Basis points
32
Source: Norges Bank Investment Management
Five new members of the fund’s leader groups
33
Carine Smith Ihenacho
Chief Corporate Governance Officer
NBIM
Hege Gjerde
Chief Financial Officer
NBIM
Sirine Fodstad
Chief HR Officer
NBIM
Per Løken
Chief Investment Officer US
NBREM
Romain Veber
Chief Investment Officer Europe
NBREM
New publications in 2017
34
Published on website 27 February 2018
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
www.nbim.no
35
Comprehensive reporting
Press conference annual report 2017 27 February 2018
Additional information on responsible investment 2017 13 February 2018
Additional information on return and risk 2017 6 March 2018
Additional information on real estate investments 2017 13 Mars 2018
36
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
www.nbim.no
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Highlights
The return was 13.7 percent in 2017• Equity 19.4 percent
• Fixed income 3.3 percent
• Unlisted real estate 7.5 percent
The return on the fund was 1,028 billion kroner
The return on equity and fixed-income investments was 0.7 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 30.8 percent
• Unlisted real estate 2.6 percent
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GOVERNMENT
ANNUAL REPORT 2017
PENSION FUNDGLOBAL
