While global debt continues to be a massive problem for countries and firms around the world, Norges Bank Investment Management (NBIM) is having no such problems. The Norwegian wealth fund which recorded its first injection of cash in 1996 has grown considerably during the last 20 years.
The sovereign wealth fund announced on September 19 that it had just surpassed the $1 trillion market for the first time thanks to a weakening of the U.S dollar and rising stock markets across the world. The firm’s wealth is equivalent to Mexico’s gross domestic product and yet it employs less than 60 employees across the world. The firm currently has offices in Oslo, London, Singapore, New York and Shanghai.
In a statement, Yngve Slyngstad, chief executive officer of NBIM said
I don’t think anyone expected the fund to ever reach $1 trillion when the first transfer of oil revenue was made in May 1996. Reaching $1 trillion is a milestone, and the growth in the fund’s market value has been stunning.
euronews (in English)
Now that NBIM has crossed the $1 trillion mark, the company has very few competitors to be concerned about. The Government Pension Investment Fund in Japan has around $1.3 trillion based on currency exchange rates while China has close to $3 trillion in currency reserves.
Sitting at the top of the list are wealth management firms like BlackRock Inc which has reportedly around $5.7 trillion and Vanguard Group which has close to $4.4 trillion.
NBIM has succeeded in growing its portfolio to over $1 trillion and keeping its employee base low as it adopts a LEAN model. The company has adopted a similar strategy when it comes to its global bond portfolio as it decided to LEAN down from 23 global currencies to supporting just 3 which are GBP, EUR and USD. The company also succeeded in bringing down management costs from 0.07 percent of its assets 5 years ago to 0.02 percent in second quarter of 2017. The company has also invested heavily in security and technology to keep confidential its buying and selling strategies.
This massive growth has also made it harder for the company to find markets that were big enough for it to make an investment. Slyngstad stated that it would not be looking to invest in new markets like infrastructure because it would require massive investment and provide a very marginal ROI for the company.
