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Government
Pension Fund
Global
Third quarter 2019
Oslo, 30 October 2019
Market value increased to 9,742 billion kronerBillions of kroner. As at 30.09.2019
2
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
09 10 11 12 13 14 15 16 17 18 19
Fixed income
Real estate
Equity
Value Percentage share
Equity investments 6,729 69.1
Unlisted real estate investments 268 2.8
Fixed-income investments 2,744 28.2
Fund 9,742 100
Source: Norges Bank Investment Management
-750
-500
-250
0
250
500
750
-750
-500
-250
0
250
500
750
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Krone rate
Return
Inflow/withdrawal
Total
236 billion kroner in returnBillions of kroner
3Source: Norges Bank Investment Management
YTD Q3 2019
Return 1,231 236
Inflow 4 -5
Krone rate 251 349
Total 1,486 580
1.6 percent quarterly returnMeasured in the fund’s currency basket. Quarterly return. Percent
4
-10
-8
-6
-4
-2
0
2
4
6
8
10
-10
-8
-6
-4
-2
0
2
4
6
8
10
09 10 11 12 12 13 14 15 15 16 17 18 18 19
1.6
Source: Norges Bank Investment Management
Strongest return for fixed incomeMeasured in the fund’s currency basket. Percent
5
-15
-10
-5
0
5
10
15
-15
-10
-5
0
5
10
15
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Equity investments
Real estate investments
Fixed-income investments
2019 Q3 2019
Equity investments 17.0% 1.3%
Unlisted real estate investments 4.1% 1.6%
Fixed-income investments 8.5% 2.4%
Source: Norges Bank Investment Management
Fund’s relative returnQuarterly return relative to reference index. Percentage points
6
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
09 10 11 12 13 14 15 16 17 18
0.01
Equity and fixed-income investments until end of 2016.
Source: Norges Bank Investment Management
Changes in value since 1996Billions of kroner
7
30.09.2019 30.06.2019 31.12.2018
Total inflow of capital* 3,378 3,382 3,371
Total return on fund 4,897 4,660 3,666
Total management fees -47 -46 -44
Changes due to fluctuations in krone 1,514 1,165 1,263
Market value of the fund 9,742 9,162 8,256
*Total inflow of capital is adjusted for accrued, not paid, management fees.
Source: Norges Bank Investment Management
Key figures per third quarterMeasured in the fund’s currency basket. Annualised. Percent
8
Since 1.1.1998 Last 10 years
Return on fund 5.92 7.63
Annual inflation 1.78 1.73
Annual management costs 0.08 0.07
Annual net real return on fund 3.99 5.72
Source: Norges Bank Investment Management
80
90
100
110
120
130
80
90
100
110
120
130
Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19
FTSE Global All Cap index*
Equity part of the fund'sbenchmark index
S&P 500 (US)
Stoxx Europe 600 (Europe)
MSCI Asia Pacific (Asia)
Developments in equity marketsMeasured in the fund’s currency basket (S&P 500 and MSCI Asia Pacific in
USD, Stoxx Europe 600 in EUR). Indexed total return (31.12.2018 = 100)
9
FTSE Global All
Cap index*
Equity part of the fund’s
benchmark index S&P 500
Stoxx
Europe 600
MSCI Asia
Pacific
Q3 2019 1.8% 1.2% 1.7% 2.7% -13%
Year-to-date 18.2% 16.8% 20.6% 20.3% 9.2%
Source: Bloomberg
* Excluding Norway
10-year government bond yieldsPercent
10
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Oct-18 Jan-19 Apr-19 Jul-19 Oct-19
US
Italy
UK
Spain
Japan
Germany
Source: Bloomberg
US Italy UK Spain Japan Germany
30.09.2019 1.66% 0.82% 0.48% 0.14% -0.22% -0.57%
31.12.2018 2.68% 2.74% 1.28% 1.41% -0.01% 0.24%
Highlights
11
▪ The market value of the fund increased by 580 billion kroner to 9,742 billion kroner
▪ The fund returned 1.6 percent in the third quarter of 2019
▪ The return on the fund was 0.01 percentage point higher than the return on the
benchmark index
▪ At the end of the quarter, the fund was invested as follows:
• Equity investments 69.1 percent
• Unlisted real estate investments 2.8 percent
• Fixed-income investments 28.2 percent
Fund value and GDPMarket value in percent of GDP and mainland GDP. As at 30.09.2019
13
0
50
100
150
200
250
300
350
0
50
100
150
200
250
300
350
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Percent ofmainland GDP
Percent of GDP
Source: Norges Bank Investment Management, Statistics Norway, Ministry of Finance
GDP for third quarter 2019 is an estimate based on numbers from the national budget 2020
Household wealth and value of the fund
14
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Gross wealth
Net wealth
Value of the fund
Source: Norges Bank, Norges Bank Investment Management
The fund larger than petroleum wealthBillions of kroner*
15
0
2,000
4,000
6,000
8,000
10,000
0
2,000
4,000
6,000
8,000
10,000
2009 2019
Government shareof remainingpetroleum wealth
Value of the fund
Source: Ministry of Finance, Norges Bank Investment Management
* Petroleum wealth is measured in 2020-kroner, while the value of the fund is measured in current value as at 30.09.2019
Fund cash flow larger than petroleum income
16
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
97 99 01 03 05 07 09 11 13 15 17 19 21
Government netpetroleum income
Fund cash flow
Source: Statistics Norway, Ministry of Finance (National budget 2020), Norges Bank Investment Management (Accounts)
Numbers for 2019 and 2020 are estimates from the national budget.
Income and savingsBillions of 2020-kroner
17
-500
0
500
1,000
1,500
-500
0
500
1,000
1,500
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019
Gov net cash flow
Transfers to the fund
Source: Ministry of Finance, National budget 2020
Income, savings and returnBillions of 2020-kroner
18Source: Finansdepartementet, Nasjonalbudsjettet 2020
-500
0
500
1,000
1,500
-500
0
500
1,000
1,500
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019
Gov net cash flow
Transfers to the fund
Fund real return
Accumulated value of return as at 25.10.2019. Billions of kroner
19
5,026 billions of kroner in return
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Source: Norges Bank Investment Management
The Norwegian oil economyBillions of 2020-kroner. Accumulated
20Source: Statistics Norway, Ministry of Finance, Norges Bank Investment Management
Real return
Net
inflow to
the fund
Petroleum
income
spent
Production
costs, etc.
Petroleum
sales
Gov net
petroleum
income
Gov
Pension
Fund
Global
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019
Production costs
Petroleum income spent
Real return
Inflow to the fund
Real return exceeds spendingBillions of 2020-kroner. Accumulated
21
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19
Petroleum incomespent
Fund real return
Source: Statistics Norway, Ministry of Finance, Norges Bank Investment Management
Strategy 2020-2022 Norges Bank Investment Management
23
Fund strategy
▪ Complement the fund’s investments in equities and fixed income by investing in real estate and renewable energy infrastructure
Ownership strategy
▪ Exercise our ownership role to safeguard the fund’s long-term economic interests
Investment strategies
▪ Utilise a set of diversified investment strategies in a risk-controlled and low-cost manner
Management strategy
▪ Foster a global, performance-oriented and efficient investment organisation
Strategy Plan 2020-22Four chapters
24
We manage a global portfolio dominated by
public market equity risk.
We will develop alternative risk measures for
the fund.
There are investment opportunities that
cannot be defined through an index.
The reference portfolio serves as a starting
point for our investment strategies.
Strategy Plan 2020-22Fund strategy
25
We target a real estate portfolio, made
up of both listed and unlisted assets, of 5
percent of the fund.
We target a portfolio of renewable energy
investments of around 1 percent of the
fund towards the end of this strategy
period.
Strategy Plan 2020-22Fund strategy
26
We focus on corporate governance
issues and areas of long-term financial
relevance.
We take a principle-based approach
and are transparent about our
activities.
Strategy Plan 2020-22Ownership strategy
27
We will contribute to the strengthening
and further alignment of corporate
sustainability reporting standards across
markets.
By the end of the strategy period, we aim
to publish all our voting instructions
ahead of shareholder meetings where
this is practicable.
Strategy Plan 2020-22Ownership strategy
28
Our investment strategies are
complementary and tailored to the fund’s
unique characteristics.
Meeting companies is an essential part of
our investment process.
We aim to cover around 1000 companies
in detail.
Strategy Plan 2020-22Investment strategies
29
Our presence in global markets
is essential to execute our overall
mandate.
We believe that performance follows
from in-depth market understanding
and an investment and result-oriented
culture.
Strategy Plan 2020-22Management strategy
30
We promote transparency, as this
motivates our organisation to be result-
oriented and performance-driven, and we
welcome public scrutiny of our results.
We continue to manage the fund in a
prudent and efficient manner.
We aim for an adaptable organisation
where teams have a high degree of
autonomy.
Strategy Plan 2020-22Management strategy
A global organisation
31
SHANGHAI
SINGAPORE
OSLO
NEW YORK
LONDON
601 employees38 nationalities
As at 31.12.2018
32
Our mission
Safeguarding financial wealth
for future generations
Government
Pension Fund
Global
Third quarter 2019
Oslo, 30 October 2019