Within its focus is the promotion of "psychological safety so that our portfolio managers dare to be contrarian and avoid herd behavior," a document outlining the strategy said. NBIM will further develop its investment simulator, used to analyze investment decisions, systemically learn from mistakes and to provide portfolio managers with feedback so they can make better decisions going forward.
Fund executives will also take allocation positions that manage the fund's risk profile and "exploit periods when we believe variations in asset prices are excessive," the document said. Such positions will apply across the fund's equities, fixed-income and real assets exposures. "Our active risk-taking will vary as market conditions change."
Regarding securities selection, which is based on fundamental research, NBIM will expand its forensic accounting and behavioral analysis to reduce exposure to companies that it expects to underperform. It will also identify quality companies and take "slightly larger stakes when we have reason to believe they will outperform."
Investing prelisting is also a focus, giving NBIM "access to companies earlier in the company lifecycle" and potentially enhancing returns, the document said.
NBIM will now target a real estate allocation of 3% to 7% of the total fund, comprising public and private real estate. The previous target was up to 5%.
In renewable energy infrastructure — a portfolio that NBIM developed following its previous strategy announcement — executives will "investigate new opportunities related to the energy transition and consider investments in the storage and transmission of renewable energy." It will also consider investing in renewable energy infrastructure funds "to explore new markets and technologies."
Other areas of focus include the development of NBIM's ESG database and analytical tools, "to make ESG information more relevant, reliable, and available to the organization," and it will also make the buildings it owns more energy efficient. This move will improve risk/return characteristics and help NBIM to reach its net-zero emissions goal for the unlisted real estate portfolio by 2050, the document said.
The fund's asset allocation was 68.3% equities, 28.5% fixed income, 3.1% unlisted real estate and 0.1% unlisted renewable energy infrastructure as of Sept. 30.