GAPP Principle 18
The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or thegoverning body(ies), and be based on sound portfolio management principles.
- GAPP 18.1 Subprinciple The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.
- GAPP 18.2 Subprinciple The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.
- GAPP 18.3 Subprinciple A description of the investment policy of the SWF should be publicly disclosed.
Status: Implemented
The Government Pension Fund Act states that the investment objective shall be the highest possible return at an acceptable level of risk and that within the scope of this objective, the Fund shall be managed responsibly. The investment policy is formed accordingly. The annual white paper submitted to Parliament by the Ministry of Finance reports on the development of the investment strategy of the GPFG. The strategy is founded on fundamental investment beliefs and the distinctive characteristics of the Fund and is developed based on comprehensive professional assessments, experiences, and thorough assessments. The strategy is operationalised in the mandate set by the Ministry. The mandate specifies objectives, risk tolerance and investment strategy. The objective of the asset manager is to maximise long-term return net of costs measured in international currency, subject to given risk limits. The mandate also covers provisions on risk exposures, leverage, benchmark indices and the selection of external managers and service providers (outsourcing).
The Executive Board of Norges Bank has laid down supplementary governing documents, including a Job Description and an Investment Mandate for the CEO of the asset management unit (NBIM), Principles for risk management, Principles for responsible investment, Principles for compensation of NBIM employees, and Principles for contributions to research. The investment mandate to the NBIM CEO supplements and sets out additional risk limits as required by the GPFG mandate issued by the Ministry of Finance. NBIM has published policies on inter alia the use of external managers and on procurement.
Sources: Government Pension Fund Act, GPFG mandate, Ministry ofFinance’s and Norges Bank’s websites.