Investor who helps manage the largest sovereign wealth fund discusses strategy and biggest fears

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Investor who helps manage the largest sovereign wealth fund discusses strategy and biggest fears

Norway's sovereign wealth fund, the largest of its kind in the world, returned nearly 6% in the first quarter, a stellar comeback for the oil-rich nation after one of its worst years on record. "The portfolio saw a turnaround in the fourth quarter of last year and the first quarter was a continuation of that," said Trond Grande, Deputy CEO of the fund, which manages $1.5 trillion and is funded by revenue from the country's oil industry. It posted a 7.4% return for its equity portfolio, about in-line with the S & P 500 which was up 7% in the first quarter of this year. The "Government Pension Fund" as it is widely known helps back up Norway's government spending. In good times, the fund shells out less money to help support the state. In bad years, like during the height of COVID, more was taken out of the fund to support Norway, but it largely exists to support future generations in the northern European nation. The fund was started in 1996 after massive offshore energy reserves were discovered off Norway's coast. Where it invests Since 2017 the Norwegian fund, led by an investment committee of about ten financial professionals, has maintained a balance of 70% stock, 30% fixed income allocation. A big part of the fund's concentration in recent years has been on renewable energy. Right now the Government Pension Fund has a mandate to invest at least two percent of assets in renewable energy. "There are large and many projects in the renewable energy industry" said Grande, but "there is also a lot of competition for investment in this area and pricing hasn't been so attractive." On the greater question of climate change, which Grande says is a major concern he believes "while we are pushing for a no carbon environment there is no short term solution to that and we acknowledge gas will be part of the picture for years." Grande says he's been watching concerns about the U.S. banking system closely since the collapse of Silicon Valley Bank in early March, but believes "lessons were learned 15 years ago" and that the "central banks have been quick and effective" in order to keep the situation under control. The prospect of higher inflation, in part caused by an intensification of tensions between superpowers, and the impact it could have on the global supply chain is a major worry for the firm. Grande also said the constant threat of a cyberattack is a serious and growing concern for the giant fund and poses "a major operational risk" for the companies in his portfolio. But Tronde, who's fund has stakes in more than 9,000 companies, is not overly concerned about all these threats. "I sleep well at night," he said.

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