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Money Management

NBIM reclassifies listed real estate under new investment strategy

Norges Bank Investment Management will invest between 3% and 5% in real estate, reclassifying listed real estate in the portfolio, on behalf of Government Pension Fund Global, Oslo, according to a new investment strategy announced Thursday, which will apply until 2022.

The new real estate strategy will be effective April 1. Previously, the fund's listed real estate was included in the equity portfolio.

Norges Bank IM's real estate manager, Norges Bank Real Estate Management, will also be integrated into NBIM.

Currently, the in-house manager of the 8.6 trillion Norwegian kroner ($1 trillion) Norwegian sovereign wealth fund can invest up to 7% in unlisted real estate. The allocation as of Sept. 30 was 2.7%.

The new real estate portfolio will target at least 30% and no more than 70% of investments in the U.S. market. Between 10% and 40% of the portfolio will be invested in the U.K., up to 30% in France, and up to 20% each in Germany and Japan, according to a document outlining the new strategy.

Office real estate could constitute between 40% to 80% of the allocation. The fund could invest up to 40% in retail real estate and up to 30% in logistics. However, investments in emerging markets will not exceed 10%.

"With a limited portfolio of unlisted real estate and a desire to integrate listed and unlisted real estate, the executive board finds that it is no longer appropriate to organize the management of unlisted real estate separately," Norges Bank IM said in a news release.

Norges Bank IM also on Thursday updated its new investments limits for other asset classes.

Effective April 1, the sovereign wealth fund will invest between 50% and 80% of its total portfolio in equities, while the bond portfolio will constitute between 20% and 50% and be split between government and corporate bonds. Norges Bank IM had 67.6% in equity investments and 29.7% in bonds as of Sept. 30. The target limit for equity investments under the previous strategy was 70%.

Separately, NBIM terminated its external equity managers running a 20 billion kroner portfolio with an environmental, social and governance focus, and will manage the allocation internally, a spokeswoman said. The spokeswoman did not disclose the names of the managers that were terminated.