“We are in the process of increasing our private equity and hedge fund allocation. They are good long term investments in an attractive asset class with competent managers,” said Kjetil Houg, OPF’s finance director. “We are expecting good risk adjusted returns. We are also interested in taking on commodities, which we do not invest in at the moment.”

OPF has already put money in three private equity funds this year and is in the process of adding one additional fund to its portfolio. It has also reduced its hedge fund allocation from 5.5 to 3.3 per cent and sold five of its funds.

“We did it for several reasons. It had to do with risk, returns and the overall composition of our portfolio,” said Mr Houg.

Four per cent of the fund’s assets are already allocated to infrastructure.

“But current guidelines prevent us from taking on more infrastructure, which is an asset class we have been investing in for years. Infrastructure has very interesting risk adjusted and stable returns, with little macro economic risk,” he added. OPF is also considering adding more equities to its portfolio.

The new investment regulations for Norwegian pension funds and pension insurance companies are expected to come into force in January 2008. CL

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