Government Pension Fund of Norway
Candlefocus EditorThe GPFN was established in October 1998 by the Norwegian Ministry of Finance (MoF). It seeks to accumulate wealth to fund the public’s pension increase and promote long-term returns and financial stability of the Norwegian economy. GPFN is part of the Norwegian Fiscal Policy Framework and aims to achieve a real rate of return to Norway’s public pension system over the long term. The return requirement is set at 4 percent above inflation, however the actual return has far exceeded the target.
The GPFN has an overall mission to create long-term value and increase the wealth of savers, including those taking part in the public pension plan. To achieve this, the GPFN employs an active asset management strategy and invests across a broad range of asset classes including equities, fixed-income securities, real estate investments and private equity funds. The foreign holdings account for a little more than 60 percent of the fund’s portfolio, while the rest is invested in Norwegian assets.
In terms of operational success, the GPFN has consistently achieved returns well exceeding its inflation expectations since it was established. As of the end of 2014, the fund had returned an average annual return of 5.3 percent (after cost and inflation), which is 1.3 percent higher than the return benchmark of 4 percent. The fund is highly diversified, with investments in 78 global markets, making it one of the world’s top pension providers.
Overall, the Government Pension Fund of Norway stands as one of the most successful long-term funds in terms of its return history and asset diversification, protecting Norway’s future income needs and providing stability and growth to the nation’s public pension system. With continued growth and development, it is likely to remain one of the best-performing pension funds in the world for years to come.