Norway's sovereign wealth fund has launched an investment simulator, which aims to assist its portfolio managers with their investment decisions.
Norges Bank Investment Management, which runs the assets of the Government Pension Fund Global, Oslo, developed the simulator "to improve the quality of our investment decisions, which over time hopefully leads to stronger investment performance," said NBIM spokeswoman Line Aaltvedt, in an email.
The sovereign wealth fund had 12.34 trillion Norwegian kroner ($1.4 trillion) in assets as of Dec. 31.
To capture rationale and reasons behind all investment decisions, the simulator uses historical investment order records to address dimensions, coupled with internal and external data sources to analyze the impact of strategy decisions and highlight significant attributes, Ms. Aaltvedt said. The simulator works to build "insight into the decision-making process based on facts and data analytics." Additionally, portfolio managers can use the simulator to "self-reflect" and "leverage strengths and address weaknesses," she said.
All design and analytical tools were developed internally with NBIM's systematic and quantitative strategies group, technology developers and portfolio managers. Currently, about 30 portfolio managers within the active equity portfolio management area use the simulator, and NBIM is working to expand its use to additional areas.
While it is too early to conclude whether the simulator has resulted in any tangible investment changes, "some portfolio managers say they are now aware of personal attributes, strengths and improvement areas they did not know about, and take this information into their investment decisions," Ms. Aaltvedt said.
