All aboard the Central Bank Crazy Train!
(Bloomberg) – As many investors question a global stock-market rally that’s now in its eighth year, the world’s biggest wealth fund is prepared to splurge.
Norway’s $970 billion wealth fund has been ordered to raise its stock holdings to 70 percent from 60 percent in an effort to boost returns and safeguard the country’s oil riches for future generations. Any short-term view on growing risks will play little part, according to Trond Grande, the fund’s deputy chief executive.
‘We don’t have any views on whether the market is priced high or low, whether bonds and stocks are expensive or cheap,’ he said in an interview after presenting second-quarter returns in Oslo on Tuesday. The decision to add stocks ‘was made at a strategic level, on a long-term expected excess return that we’re willing to take risk to achieve. And parliament has said that they wish to spend some time to phase in that increase.’
The fund has doubled in value over the past five years and is continually adding risk to its portfolio. It returned 202 billion ($26 billion) kroner in the second quarter, and 499 billion kroner in the first half, the best on record for the period.
This post was published at Wall Street Examiner on August 22, 2017.