CEO of Norway's wealth fund to quit after 12 years at the helm

Yngve Slyngstad has overseen huge change at the fund, including a partial retreat from the fossil fuel industry.

by
    The 56-year-old will stay on at the fund until a replacement is found [File: Neil Hall/Reuters]
    The 56-year-old will stay on at the fund until a replacement is found [File: Neil Hall/Reuters]

    The chief executive officer of Norway's $1.1 trillion sovereign wealth fund, Yngve Slyngstad, said he will step down after leading the giant investor for almost 12 years.

    He made the announcement shortly after the fund said it grew by $26 billion in the third quarter, buoyed by its holdings of U.S. bonds and stocks.

    "I am proud of having been part of building up a leading international investment organisation with talented and professional employees," Slyngstad said on Wednesday. "We have delivered good returns for the best of our nation." He will stay on until a successor is found.

    During his time at the fund, Slyngstad has overseen a transformation in its portfolio that saw it expand into real estate, and more recently, announce a retreat from key parts of the fossil fuel industry.

    Throughout, the 56-year-old has underscored the fund's long-term view on all its investments, which has at times allowed it to adopt a somewhat contrarian investment approach.

    "Over these 12 years, the fund has delivered very good results and the fund has achieved a strong position internationally and in Norway," Oystein Olsen, central bank governor and chairman of the executive board that oversees the fund, said in a statement.

    "Yngve Slyngstad has been a distinct leader of Norges Bank Investment Management and developed a leading and global investment organisation."

    Key figures

    • Returned 1.6%, or 236 billion kroner ($26 billion), in quarter

    • Stocks rose 1.3%, bonds 2.4% and real estate 1.6%

    • Held 69.1% in equities, 28.2% in fixed income and 2.8% in properties

    The world's biggest fund of its kind closely tracks broader market indexes, but has some leeway to stray from its benchmarks. It has had a meteoric rise since it was founded 20 years ago, and earlier this month exceeded 10 trillion kroner in value as stock markets rallied after a volatile third quarter and the Norwegian currency slumped to a record low. The fund invests abroad to avoid stoking inflation at home.

    The largest stock holdings at the end of the quarter were Microsoft Corp. and Apple Inc. Its largest bond holdings were in U.S. Treasuries, followed by Japanese government bonds.

    The fund continued to pare its emerging market bond holdings after this year receiving approval from the government. The fund has argued it makes little sense to own government bonds across the world since they have become more correlated and that it's also exposed to a wide array of currency risk through its ballooning stock holdings.

    Emerging markets slid to 7.7% of the bond portfolio from 7.9% at the end of the second quarter.

    In the quarter, the government withdrew 5 billion kroner, compared with a 6 billion-krone deposit in the second quarter. After making its first withdrawal in over a year in August, the Conservative-led government said it planned to tap the fund in the following months as well, covering for lower-than-expected oil and gas income due to weak prices.

    Norway self-imposed budget rules limits spending of oil cash to 3% of the fund's value each year. That used to be easily covered by the annual income from petroleum taxes, public stakes in offshore fields and dividends from state-controlled Equinor ASA.

    Following a historic slump in crude prices that started in 2014, the government was forced to withdraw money from the fund for the first time in 2016.

    The fund's return in the quarter beat its benchmark by 0.01 percentage point.

    - With assistance from Stephen Treloar and Jonas Cho Walsgard.

    SOURCE: Bloomberg