NORGES BANK INVESTMENT MANAGEMENT NIRI SAN FRANCISCO CHAPTER PRESENTATION TUESDAY 13TH MAY 2014 SPEAKER: HUGO SANDERS- HEAD OF CORPORATE ACCESS

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1 NORGES BANK INVESTMENT MANAGEMENT NIRI SAN FRANCISCO CHAPTER PRESENTATION TUESDAY 13TH MAY 2014 SPEAKER: HUGO SANDERS- HEAD OF CORPORATE ACCESS

2 Safeguarding financial wealth From natural resource to financial wealth. Percent of mainland GDP Sources: Facts The Norwegian Petroleum Sector 2012; Statistics Norway, Ministry of Finance, NBIM

Percent of mainland GDP 400 300 200 100 0 2000 2013 2030

3 A fund owned by the Norwegian people Norwegian Parliament Government Pension Fund Act National Budget Annual white paper National Accounts Ministry of Finance Mandate Quarterly and annual reports Investment strategy advice 3

Annual white paper National Accounts Ministry of

4 The fund mechanism The fiscal rule Petroleum revenues + return on investments Non-oil revenues Pension Fund Global Transfer to finance non-oil budget deficit Fiscal Budget 4 Fiscal policy guideline (over time spend real return of the fund, estimated at 4%) Expenditures

finance non-oil budget deficit Fiscal Budget 4 Fiscal policy

5 The Government Pension Fund Global Background and overview 863 bn USD Total GPFG as of 7 th May 2014 Real Estate, 5% 5.7 Percent Return since inception, 1998 Fixed Income, 35% Equity, 60% Long-term Global Diversified 8213 companies 1060 fixed income issuers 82 countries invested 27 currencies 370 employees 5 offices 5

7 Percent Return since inception, 1998 Fixed Income, 35% Equity, 60% Long-term

6 A large fund Billion dollars and percent of Norwegian GDP USD 863 billion Percent of GDP (right axis)

200 150 500 Percent of GDP (right axis) 100 250 50

7 Investment strategy Long term Safeguarding assets for future generations Global Protect international purchasing power Diversified Real return at acceptable risk 7

8 8 The fund s investments Investments in 82 countries and 44 currencies

9 Asset class allocation Trillion USD and percent, 31 December Global market value (left axis, trillion USD) NBIM holdings (rha, per cent) SWF average and range (rha, per cent) 0 FTSE Global All-Cap Barclays Global Aggregate Global RE* EQ FI RE 0 9 Source: Norges Bank Investment Management, FTSE, Barclays, Sovereign Wealth Fund Institute, Deutsche Bank Research (*commercial real estate estimated market size)

Global All-Cap Barclays Global Aggregate Global RE* EQ FI RE 0 9 Source: Norges Bank Investment Management,

10 Asset mix of selected, large funds Data as of latest annual or quarterly reports GPFG CPPIB ABP ADIA CIC Equity Fixed Income Real Assets Absolute Return Cash/Other GIC Future Fund Source: Annual reports, NBIM calculations

Equity Fixed Income Real Assets Absolute Return

11 Regional allocation Target weights and average ownership in equity markets, percent 39% % % 2 42% 19% Europe America, Africa, Middle East Asia and Oceania Global 11 Source: FTSE, Norges Bank Investment Management

3 % 2 42% 19% 1 1 0 0 04 05 06 07 08 09 10 11 12 13 14 Europe

12 Global Equities Average ownership percentages 8213 companies NBIM in USA Own 1992 companies (24%) Equities allocation in US is 29.5% On average own 0.76% Largest US holding is Blackrock (7%) 2.5 % 1.3 % Europe America, Africa, Middle East Asia and Oceania Global Source: Norges Bank Investment Management

76% Largest US holding is Blackrock (7%) 2.5 % 1.3 % 3.00 2.50 2.00 1.

13 13 NBIM Equity Management The fund is in the process of moving toward regional market capitalisation weights for equity investments. Its largest geographic exposure is to Europe and North America, followed by developed markets in Asia and Oceania and emerging markets. Investments are limited to companies listed on regulated stock exchanges or in companies where the board of directors has said it intends to seek a listing on a bourse. The fund has an upper limit of 10 percent on ownership in any given listed company. There are four main equity strategies Market Exposure Strategies Sector Strategies Capital Strategies External Strategies

Investments are limited to companies listed on regulated stock exchanges or in companies where the board of directors has said it intends to seek a listing on a

14 External managers 3.7% managed by 51 specialist managers Mexico City, Mexico Bogota, Colombia Oslo, Norway London, GB Frankfurt, Germany Paris, France New York, USA Stockholm, Sweden Tallin, Estonia Moskva, Russia Warsaw, Poland Budapest, Hungary Milan, Italy Beijing, China Istanbul, Turkey Tokyo, Japan Cairo, Egypt Seoul, South Korea Shanghai, China Dubai, UAE Riyadh, Saudi Arabia Hong Kong Mumbai, India Manila, Philippines Bangkok, Thailand Ho Chi Min, Vietnam Kuala Lumpur, Malaysia Jakarta, Indonesia Santiago, Chile Cape Town, Sør-Afrika Sydney, Australia 14

USA Stockholm, Sweden Tallin, Estonia Moskva, Russia Warsaw, Poland Budapest, Hungary Milan, Italy Beijing, China Istanbul, Turkey Tokyo,

15 Responsible investor Investor characteristics Long-term horizon Long-term risks: Active ownership focus areas Children s rights Climate change Water management Financial investor Minority shareholder Corporate governance: Equal treatment of shareholders Shareholder influence and board accountability Markets: 15 Well-functioning financial markets

Financial investor Minority shareholder Corporate governance: Equal treatment of

16 Transparency The funds market value updated continously at nbim.no Complete annual holding lists Voting records published one day after general meetings Annual and quarterly reports including full IFRS financial reporting Governing documents, correspondence and research on website 16

after general meetings Annual and quarterly reports including full

How to Interact with NBIM NBIM wants to have direct relationships with our corporates holdings where possible and would encourage you as IRs to reach out direct to your relevant Portfolio Manager

17 How to Interact with NBIM NBIM wants to have direct relationships with our corporates holdings where possible and would encourage you as IRs to reach out direct to your relevant Portfolio Manager contact or the Corporate Access team on any questions you have. We are happy to work with your partners and advisors on corporate access but feedback will only be given to the company direct There is likely to be more than one PM interested in meeting with you globally and therefore its important to consider this and reach out to Corporate Access should you have questions Our voting records are published one day after general meetings and any questions related to AGMs should be directed to our Corporate Access team Any queries or questions you have can be directed to Hugo Sanders or the NBIM corporate access team 17

We are happy to work with your partners and advisors on corporate access but feedback will only be given to the company direct There is likely to be more than one PM interested in meeting with you

Norges Bank Investment Management The Norwegian Government Pension Fund - Global & NBIM

The Norwegian Government Pension Fund - Global & NBIM UKSIP Sovereign Wealth Fund Seminar Espen Klitzing,NBIM October 4, 2007 1 The Ranking of Oil Producers 2006 (mill b/d) Norges Bank Investment Management