UPDATE 1-Norway wealth fund plans more active role in some firms

Fri Apr 26, 2013 9:24am EDT

(Adds quotes by fund chief, detail, background)

* Volvo among the firms targeted by fund

* Three criteria including over $1 bln invested

* Return on investment was 5.4 percent in Q1

By Gwladys Fouche

OSLO, April 26 (Reuters) - Norway's sovereign wealth fund, one of the world's biggest investors, said it wants to play a more active role in management of companies in which it is heavily invested, a list that includes Sweden's Volvo .

The fund, whose investments totalled $728 billion on Friday, said it aimed to participate in the election of board members at certain companies.

"It means having an ownership in the order of 5 percent and that we find ourselves among the top five investors," Chief Executive Yngve Slyngstad said on Friday.

"Our ownership should be significant, in the order of $1 billion," he added.

This is the latest step by the fund, which invests Norway's revenues from oil and gas for future generations, as it moves to more actively manage its portfolio.

The fund wants to ensure that shareholders are treated equally and that actions taken by some companies it owns do not impact negatively other companies it has invested in, among other reasons, Slyngstad said.

Slyngstad declined to name the companies the fund had in mind, but based on the three criteria he cited, the standout would be Volvo, the world's No.2 truck-maker.

A LEADER

Norway has become a leading voice in encouraging global sovereign wealth funds, which manage assets of over $5 trillion, to become more active in exercising their rights and responsibilities.

Greater participation in corporate governance from these funds may help boost their own accountability and transparency, helping them gain acceptance for their investments in other countries. Many funds still prefer to give companies cash quietly and not intervene, however.

Separately, Slyngstad said the Norwegian fund had a 5.4 percent return on its portfolio in the first quarter of 2013, slightly beating its own benchmark index.

The fund held 62.4 percent of its portfolio in equity holdings against 61.2 percent at the end of the fourth quarter.

The fund's results were boosted by a 14 percent return on U.S. stocks, which amount to 30 percent of its equity portfolio, as well as a 14 percent rise in Japanese stocks.

The fund is gradually increasing the amount of equity it holds in its portfolio. Last year it was allowed by the Norwegian finance ministry to reduce its bond holdings to 40 percent from 60 percent of its investments.

It is also gradually cutting its holdings in European stocks and increasing its investments in companies in higher-performing emerging markets. (With reporting by Natsuko Waki in London; editing by Jane Baird)

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