Investment in Practice

Ole Bjørn Røste
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Ole Bjørn Røste: Norwegian University of Science and Technology

Chapter Chapter 4 in Norway’s Sovereign Wealth Fund, 2021, pp 95-144 from Springer

Abstract: Abstract This chapter discusses practical aspects of how off-shore investments are made regarding the locations of assets, organization of investment activities, allocation on asset classes, and selections within them. This clarifies key elements of an index-like management style. The investment horizon has implications for asset allocation. In aggressive approaches, one accepts risk to aim at high expected returns. One measure of the risk appetite is the allocation to equity. Further, locations of assets matter. Not all locations receive external investments. An investor must at a minimum be able to expect to receive the fruits of his investment if it is successful. Secure environments are thus preferred. There are scale economies in fund management, linked e.g. to overhead costs. This favors large funds. Large players may, however, move market prices through their transactions. This makes it more difficult to execute transactions for large than for small players, and hamper activities that require large transaction volumes.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:nrmchp:978-3-030-74107-5_4

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DOI: 10.1007/978-3-030-74107-5_4

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