February 27, 2019 / 1:00 PM / 6 months ago

Norway wealth fund shrugs off Brexit, plans rise in UK investments

OSLO (Reuters) - Norway’s $1 trillion (£753 billion) sovereign wealth fund, the world’s biggest, said on Wednesday it planned to keep increasing its investments in Britain, and it shrugged off uncertainties about Brexit.

FILE PHOTO: A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. REUTERS/Gwladys Fouche

The fund, built from Norway’s oil and gas revenues and one of the biggest investors in Britain, said 8.5 percent of its portfolio was in British equities, bonds and real estate at the end of 2018.

“We will continue to be significant” investors in Britain, the fund’s CEO Yngve Slyngstad told Reuters after the fund reported a loss in market value for 2018. “And we foresee that over time that our investments in the UK will increase.”

“With our time horizon, which is 30 years plus, current political discussions do not change our view of the situation,” he said when asked about the risks caused by Britain’s plans to quit the EU on March 29.

Even so, Britain’s share of the fund’s portfolio slipped below Japan’s to third from its usual spot in second behind the United States. Slyngstad said the dip was caused by a strengthening of the yen against the pound.

And he said Britain was included in a broad-based global equities buying spree worth about $30 billion from November to January when the fund reckoned it was buying shares on the cheap amid turmoil on markets.

The fund is one of the biggest foreign investors in Britain, as a co-owner of London’s Regent Street, as a top five owner in firms such as HSBC and BP among others, and as a holder of roughly 6 billion pounds of UK government debt.

Slyngstad also reaffirmed commitment to Britain even in the case of a ‘no-deal’ Brexit. Norway is not a member of the EU, although it is bound by many of its rules.

“We see no operational consequences of any possible outcomes,” he said. He said that the fund had almost 250 staff in London and would stay at that level regardless of the outcome of the Brexit talks.

Worldwide, the fund owns about 1.4 percent of all equities.

Falls in stock markets meant that the fund, equivalent to $193,000 for every Norwegian man, woman and child, had a negative return on investment of 6.1 percent in 2018, down from a positive 13.7 percent in 2017.

And it lagged its benchmark index by 0.3 percentage point.

“This is the first time that the fund has had a considerable decline in value,” Slyngstad told a news conference. “The only other time was a slight decline in 2002.”

The fund’s value slipped to 8.26 billion crowns (£728.28 million) at the end of 2018 from 8.49 billion in 2017. But Slyngstad said that market gains so far in 2019 had wiped out last year’s losses.

At the end of 2018, the fund’s biggest equity holdings were in Microsoft (64.7 billion crowns), Apple (62.7 billion), Alphabet (57.6 billion), Amazon (54.8 billion), Nestle (53.9 billion) and Royal Dutch Shell (51.3 billion).

Reporting by Gwladys Fouche and Alister Doyle; Editing by Terje Solsvik, Larry King and Hugh Lawson

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