According to the largest shareholder in the world, banks have replaced technology :: Investor.bg

According to the largest holder of listed shares in the world – the Norwegian Sovereign Wealth Fund in the amount of 1.3 trillion. dollars, financial firms have displaced technology companies as the main driver of returns.

“At the time, and especially last year, it was technology and green stocks that drove returns,” said Trond Grande, the fund’s deputy chief executive. “What we see in the first quarter is a little different,” with the best returns coming from the financial and energy sectors.

In terms of finance, “we need to look at this in the context of rising long-term interest rates,” which means that banks can “borrow at higher margins,” Grande said.

Financial shares represent 14.6% of the fund’s investments. According to official records, the shares of JPMorgan Chase & Co. are the largest bank holding of the fund – amounting to $ 3.5 billion. The investor owns roughly $ 2.9 billion in shares of Bank of America Corp. and $ 2.5 billion to UBS Group AG. The fund’s exposure to the financial sector last year brought it a loss of almost $ 12 billion.

The rise in interest rates, which Grande said was behind the better performance of the financial industry, comes amid speculation about a return to inflation fueled by record economic stimulus packages in the United States and Europe.

Asked if he was worried about inflation, the manager described it as a “ghost.” He said the important issue was the extent to which inflation could be described as “unexpected and strong”.

“In the long run, securities are a class of assets that provide some protection against inflation,” Grande said.

The fund’s securities portfolio had a return of 6.6% last quarter. Bonds lost 3.2% and real estate rose 1.4%. The return is generally 4%. Also, the increase in prices for raw materials and oil has led to a rise in shares in the energy portfolio of the fund, said Grande.

But now it’s important to be prepared for the fact that things can turn around and turn around quickly, “he said.

To prepare for the future, the fund has said it wants to be a world leader in sustainable investment. This means deepening in the asset class in which it has recently received political approval to invest – renewable energy infrastructure. After the fund made its first purchases earlier this year, Grande said it was impossible to predict how soon the entire $ 14 billion earmarked for this segment would be invested.

“These assets usually arrive in groups and not so often,” he said.

Created in the 1990s to invest oil and gas revenues, the Norwegian fund jumped into the renewable infrastructure segment for the first time earlier this year. The Norwegian government also wants the fund to part with its investments in more than 2,000 companies out of approximately 9,000 as part of a proposal that aims to ensure that it is not exposed to climate or social risk, especially in emerging markets.

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