Monday, February 26, 2007

adding fuel to the fire....Norway's $287 Billion Pension Fund May Invest in Real Estate and Private Equity

wow! i´m pretty sure the markets will listen and feel the impact. unfortunately this announcement will add fuel to the private equity and property madness. but maybe this could also mean that the top is pretty close. looks really like they are late to the party......( at least that is what i hope....) on the other hand who really wants to buy bonds these days......

donnerwetter. denke die märkte werde es mit wohlwollen vernehmen. dummerweise wird damit noch mehr öl ins feuer von private equity und immobilien gegossen. aber ectl. bedeutet es ja auch das das ende der fahnenstange bald erreicht ist. mir erscheint es so als wenn norwegen doch reichlich spät auf den pe und immoboom draufspringt (zumindest hoffe ich das....).auf der anderen seite kann ich es sehr gut nachvollziehen das die keine anleihen kaufen wollen........


here are some more facts on the norweign fund : http://tinyurl.com/2jb76r
The value is estimated to grow to about NOK 1700 billion by the end of 2006, equivalent to 84 per cent of GDP.

On 30 June 2006 the actual benchmark portfolio consisted of 40.6 per cent equities and 59.4 per cent fixed income investments

Equities are invested 50.1 per cent in Europe, 35.5 per cent in the Americas and South Africa and 14.4 per cent in Asia and Oceania.

Bonds are invested in Europe (59.8 per cent), North America (34.2) and Asia and Oceania (6 per cent).

In total 22 per cent of the fund is managed by external managers ( thank god that they have only outsourced a small portion to folks like goldman etc / zum glück haben die nur nen keinen teil an goldman und co gegeben....)


Feb. 26 (Bloomberg) -- Norway's $287 billion global pension fund, Europe's largest retirement savings plan, may invest as much as 15 percent of its assets in property and leveraged buyout funds to boost returns. (looks like this graph from pimco is already outdated....sieht so aus als wenn diese daten von pimco bereits überholt sind)
Knut Kjaer, head of the fund, plans to put 10 percent into real estate and infrastructure investments and 5 percent into LBO and venture capital funds starting next year. The switch will have to be approved by Norway's government.

``This is to diversify and to increase the expected returns of the assets,'' ..... The fund, set up in 1996 to preserve a portion of the country's oil wealth for future generations, currently invests only in stocks and bonds.

Retirement plans globally are shifting into so-called alternative investments. Pension funds in the world's seven biggest markets now have 14.4 percent of their assets in private equity, real estate and hedge funds, up from 7.7 percent in 2001,

Kjaer's fund returned 11.1 percent in 2005, while the country's benchmark OBX Index gained 40 percent. He is barred from investing in Norway, the world's fifth-largest oil exporter, to prevent the economy from overheating.

The fund took in 220 billion kroner ($35.9 billion) in 2005 from oil and gas sales and taxes, and won't start paying out money for another decade or so,

New Investments
Property investment increased about 26 percent worldwide in 2006 to $600 billion
, ... Investment in European commercial real estate reached 242 billion euros ($319 billion), the ..... This year there may be an excess of money chasing a shortage of property in Europe, ...

Kjaer said he probably will invest in property funds rather than make direct purchases of real estate.

The fund's diversification plans trail other pension funds. The $225 billion California Public Employees' Retirement System, the largest public U.S. pension fund, has been investing in private equity since the 1990s, and has put money into funds run by firms such as Hellman & Friedman LLC, Texas Pacific Group, Carlyle Group and Madison Dearborn Partners LLC.

``The party has been going on for while,'' .... ``The chance for them to add value now is less than it was three years ago.''

especially when you look at the latest deals..../ besonders wenn man sich die letzten deals ansieht....
http://immobilienblasen.blogspot.com/2007/02/next-biggest-buyout-everkkr-may-buy-txu.html,http://immobilienblasen.blogspot.com/2007/02/commercial-property-madness-numbers-on.html

European private equity firms returned an average 24 percent in 2005, ...., Europe's benchmark Dow Jones Stoxx 50 Index rose 21 percent.

Investing in private equity will probably increase the amount the fund pays in fees, which currently stands at about 1 percent of assets invested for the 80 percent of the fund that's managed internally, Kjaer said. LBO firms typically charge management fees of about 2 percent and keep 20 percent of the profits from their investments.

Norway's pension fund surpassed Stichting Pensioenfonds ABP of the Netherlands last year to become Europe's biggest retirement fund.

More Equities
Kjaer also plans to increase the portion of the fund invested in equities to 60 percent from 40 percent, and cut fixed-income investments to 25 percent from 60 percent. Any change in asset allocation will probably be made by shifting money coming into the fund to the new asset classes. (wow, norwey is alread one of the most aggressive oil inestors out there / norwegen ist schon jetzt einer der agressivsten ölinvestoren! )
größer/bigger http://www.pimco.com/NR/rdonlyres/056CBD79-202C-424B-B715-56F9A70E88D4/3119/Figure_10.gif

Kjaer has no plans to invest in hedge funds. Because of the long-term nature of the Norway fund, with an investment horizon of about 100 years, he doesn't have to protect against periodic declines in stock markets.

``You don't find many other funds having the same long time horizon,'' Kjaer said. ``It's a many generations perspective.''



you must give norway credit to develope such a fund and the long-sighted approach. their fund was the first and a model to all the other that followed (russia, uae etc).

man muß den hut vor den norwegern ziehen. sie waren die ersten überhauot die so einen generationenfonds in die welt gesetzt haben. die anderen wie russland, uae folgen nun diesem beispiel.

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