Norway's sovereign wealth fund is managed by the Norwegian central bank, on the behalf of the Norwegian people. The fund makes its money from taxes on oil and gas. It also owns oil fields, and receives dividends from its 67% stake in Norwegian oil company Statoil.
At a value of around $760bn, it's the biggest sovereign wealth fund in the world. To put that into some perspective, the fund is now so large that it owns – on average – 1.25% of every global company, reports the FT. One in every eighty dollars invested in the global equity market is owned by the Norwegian population. That's an incredible amount of influence when you think about it.
When it was first started, politicians envisaged the fund lasting for maybe 30 years. Now they reckon it could last for a century or more.
It aims to have 60% of its money in equities, 35% in bonds, and 5% in real estate (it's still building up to the real estate chunk). It doesn't hold hedge funds, or private equity, or even infrastructure investments. Why? Largely because they are simply too expensive.
Nor does it get distracted by comparing itself to external benchmarks. Lots of sovereign wealth fund 'experts' moan that Norway's fund is little more than a giant index tracker. In an FT article from last year, one pundit notes that this "may be a cost-effective way of managing money, but… additional opportunities are being missed."
To which the answer has to be: so what? The Norwegian fund has been very successful on its own terms. Since 1998, it has managed to make a real return (after inflation) of more than 2% a year. That might not sound a lot. But if you are managing a vast pile of money, and you are able to not only preserve it, but to grow it at a rate that beats inflation consistently, then that's a huge success.
Just now, Norway's sovereign wealth fund is less exposed to bonds than it's ever been. At the end of the second quarter of 2013, reports the FT, equities accounted for 63.4% of the fund. Bond holdings had dropped to 35.7%. That's a record low.
That's not because equities are cheap – it's because bonds are expensive. "I have said before it is less a reflection of enthusiasm for the equity markets and more a lack of enthusiasm for the bond markets," said Yngve Slyngstad, the fund's chief executive.
So in such an uncertain environment, how do you make sure that you take profits when you make them, and keep buying as low as possible? The answer is: rebalancing.