Government Pension Fund Global Annual report 2019 Oslo, 27 - PowerPoint PPT Presentation

Government Pension Fund Global Annual report 2019 Oslo, 27 February 2020

10,088 billion kroner in the fund Market value as at 31.12.2019. Billions of kroner 12,000 12,000 Value Percentage share 10,088 Equity investments 7,145 70.8 Unlisted real estate investments 273 2.7 10,000 10,000 Fixed-income investments 2,670 26.5 Fixed income 8,000 8,000 Unlisted real estate 6,000 6,000 Equity 4,000 4,000 2,000 2,000 0 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2 2

19.9 percent return in 2019 Measured in the fund’s currency basket. Percent 30 30 19.9% 20 20 10 10 Annual return 6.1% 0 0 Accumulated annualised return -10 -10 since 1998 4Q 2019 5.1% -20 -20 2019 19.9% Since 1998 6.1% -30 -30 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 3

26 percent in equity return in 2019 Measured in the fund’s currency basket. Percent 50 50 40 40 30 30 Equity 20 20 10 10 Unlisted real estate 0 0 Fixed income -10 -10 -20 -20 2018 2019 Equity investments -9.5% 26.0% -30 -30 Fixed-income investments 0.6% 7.6% Unlisted real estate 7.5% 6.8% investments -40 -40 Fund -6.1% 19.9% -50 -50 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 4

5,358 billion kroner in total return As at 31.12.2019. Billions of kroner 11,000 11,000 1,390 9,000 9,000 7,000 7,000 Krone rate 5,000 5,358 5,000 Return 3,000 3,000 Inflow (after management costs) 3,341 1,000 1,000 -1,000 -1,000 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 5

1,692 billion kroner in return in 2019 Billions of kroner 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 -500 -500 -1,000 -1,000 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 6

The fund’s real return Key figures measured in the currency basket. Annualised. Percent 2019 Last 10 years Since 1.1.1998 Return on fund 19.95 7.83 6.09 Annual inflation 1.80 1.68 1.77 Annual management fees 0.05 0.06 0.08 Annual net real return 17.78 5.98 4.17 7

243 billion kroner in cash flow Billions of kroner 250 250 200 200 Fixed income 150 150 Unlisted real estate 100 100 Equity 50 50 0 0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 8

Positive relative return in 2019 Annual relative return of the fund. Percentage points 5 5 4 4 3 3 2 2 Annual relative return 0.23% 1 1 0.25% 0 0 -1 -1 Accumulated annualised relative -2 -2 return 4Q 2019 0.22% -3 -3 2019 0.23% Since 1998 0.25% -4 -4 -5 -5 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 9

Contribution to relative return Annualised. Percentage points Strategy 2019 Since 2013 -0.12 -0.10 Fund allocation Security selection 0.16 0.11 Asset management 0.19 0.18 Total 0.23 0.19 10

Value fluctuations in a longer perspective Percent (left axis) and billion kroner (right axis) 50 1,000 45 900 779 40 800 35 700 Risk measured in 30 600 percent (left axis) 25 500 20 400 Risk measured in 15 300 kroner (right axis) 10 200 7.7 5 100 0 0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 11

Equity purchases and sales Billions of kroner. Equity benchmark index is indexed total return 150 400 350 100 Equity purchases 300 (left-hand axis) 50 250 0 200 Equity benchmark index (right-hand 150 -50 axis) 100 -100 50 -150 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 12

Financial markets in 2019 13

Equity markets in 2019 Measured in USD (Stoxx in EUR). Indexed total return (31.12.2018 = 100) 140 140 FTSE Global All Cap S&P 500 Stoxx Europe 600 MSCI Asia Pacific 4Q 2019 9.2% 9.1% 6.2% 9.5% FTSE Global All Cap 2019 27.1% 31.5% 27.7% 19.9% (global) 130 130 S&P 500 (US) 120 120 Stoxx Europe 600 (Europe) 110 110 MSCI Asia Pacific (Asia) 100 100 90 90 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 14 Source: Bloomberg

Equity markets in 2019 Measured in USD. Indexed total return (31.12.2018 = 100) 140 140 FTSE Global All Cap FTSE Emerging 4Q 2019 9.2% 11.8% 2019 27.1% 20.6% 130 130 FTSE Global All Cap 120 120 FTSE Emerging 110 110 100 100 90 90 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 15 Source: Bloomberg

Various stock sectors in 2019 Measured in USD. Indexed total return (31.12.2018 = 100) 150 150 Technology Industrials Consumer services Telecommunications Oil and gas 4Q 2019 14.5% 8.8% 7.3% 3.7% 6.4% Technology 2019 44.0% 31.1% 25.9% 17.0% 13.8% 140 140 Industrials 130 130 Consumer services 120 120 Telecommunications 110 110 Oil and gas 100 100 90 90 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 16 Source: FTSE Russell

Various stock sectors last ten years Measured in USD. Indexed total return (31.12.2009 = 100) 500 500 Technology Health care Consumer services Basic materials Oil and gas 450 450 2019 44.0% 23.3% 25.9% 18.5% 13.8% Technology 10 years (annualised) 15.2% 13.3% 12.7% 2.7% 1.5% 400 400 Health care 350 350 Consumer services 300 300 250 250 Basic materials 200 200 Oil and gas 150 150 100 100 50 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 17 Source: FTSE Russell

The fund’s largest equity investments 31.12.2009 Sector 31.12.2019 Sector HSBC Holdings PLC Financials Apple Inc Technology Royal Dutch Shell PLC Oil and gas Microsoft Corp Technology BP PLC Oil and gas Alphabet Inc Technology Nestlé SA Consumer goods Nestlé SA Consumer goods TOTAL SA Oil and gas Amazon.com Inc Consumer services 18

10-year government bond yields Percent 4.0 4.0 US Germany Japan UK Italy 3.5 3.5 31.12.2018 2.7% 0.2% 0.0% 1.3% 2.7% US 31.12.2019 1.9% -0.2% 0.0% 0.8% 1.4% 3.0 3.0 2.5 2.5 Germany 2.0 2.0 Japan 1.5 1.5 1.0 1.0 UK 0.5 0.5 Italy 0.0 0.0 -0.5 -0.5 -1.0 -1.0 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 19 Source: Bloomberg

Annual investments in unlisted real estate Completed transactions. Billions of kroner 50 50 44 37 40 40 30 30 New investments 19 17 20 20 Sales 15 14 11 7 Total amount 10 10 4 0 0 -10 -10 2011 2012 2013 2014 2015 2016 2017 2018 2019 20

Aggregated real estate investments Billions of kroner 450 450 414 400 400 350 327 350 141 291 300 300 81 Listed real estate 242 235 investments 73 250 250 51 54 200 200 Unlisted real estate 141 investments 150 150 273 33 246 219 100 100 191 181 52 108 50 50 52 0 0 2013 2014 2015 2016 2017 2018 2019 21

Stable internal management costs Management costs. Basis points 16 16 14 14 12 12 10 10 Management costs 8 8 6 6 Internal management costs 4.7 4 4 3.7 2 2 0 0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 22

Costs Millions of kroner 2019 2018 Personnel costs 1,448 1,262 1,962 1,885 Other internal costs 902 1,397 External management costs Management costs 4,312 4,544 23

Published on our website 27 February 2020 www.nbim.no Holdings list Monthly returns Main external service providers Overview of external managers Detailed tables on return and risk Approved issuers of government bonds 24

Upcoming reports To be published 26 March 2020 To be published 3 March 2020 25

Public information available on our website www.nbim.no ▪ Submissions to the Ministry of Finance Investment advice ▪ Discussion notes Analyses that may form the basis for the fund’s investment strategy and advice to the Ministry of Finance ▪ Asset manager perspectives The fund’s views and reflections on issues topical for the financial industry ▪ Expectations documents The fund’s expectations to companies regarding specific focus areas ▪ Position papers The fund’s position on specific ownership topics ▪ Public reports 26

Highlights 2019 ▪ The return was 19.9 percent in 2019 • Equity 26.0 percent • Unlisted real estate 6.8 percent • Fixed income 7.6 percent ▪ The return on the fund was 1,692 billion kroner ▪ The return on the fund was 0.23 percentage point higher than the return on the benchmark index ▪ The market value of the fund increased to 10,088 billion kroner ▪ Asset allocation at the end of the year • Equity 70.8 percent • Unlisted real estate 2.7 percent • Fixed income 26.5 percent 27

Government Pension Fund Global Annual report 2019