Our Insights

About personal finance, investments and markets.
December 1, 2016

Update on investment strategy of world’s largest fund

On Oct. 25th, we reported that Norway’s $880bn pension fund could be on the cusp of a major change in its asset allocation. A government-commissioned report recommended that the fund should increase its equity allocation from currently 60% to 70%. Today, the Norwegian central bank, which manages the fund, suggested an even higher allocation of 75% going forward.

In today’s low interest rate environment, the only way to increase the long-term return potential lies in a higher equity allocation. There are no short-cuts.

Why is this news so important? Because most individual investors struggle with the most important aspect of investing – the right asset allocation. Nothing is more critical for the risk-return profile of your portfolio than choosing the optimal equity:bond mix. Since most individual investors would like to mimic the returns of large institutional investors, maybe they should first compare their asset allocation. Put simply: if you are a long-term investor and deviate too much from the asset allocation of large institutional investors, you are probably doing something wrong.

If you would like to schedule a call to discuss your goals and your portfolio, please give us a ring at +49 89 89 89 95 05 or send us an email. We’d be more than happy to speak with you.