Foto: Melanie Burford
Foto: Melanie Burford

Capital management

The Board of Directors adopts the Foundation’s annual investment strategy with pertaining guidelines for asset allocation. The Foundation’s original capital is expected to maintain its true value in the long term. Profit exceeding maintenance of true value will be distributed in accordance with the Foundation’s object.

Section 18 of the Foundations Act forms the external framework for the capital management: ‘The foundation’s capital shall be adequately managed, ensuring that sufficient consideration is at all times given to the security of the capital and the opportunities for assuring a satisfactory return in order to achieve the foundation’s object.’

For a foundation, this means that risk shall be kept within reasonable limits to ensure a sustainable distribution level to the foundation’s object. Risk management is a key element of capital management. The investment portfolio is therefore well diversified and employs various types of investment instruments which carry varying risk and covariation.

The Foundation has invested its capital in shares (mainly through securities funds), interest/bonds (through securities funds and individual securities), real property and private equity. The breakdown between the different classes of assets will vary somewhat from year to year. In order to achieve the target return

a substantial proportion of the capital is invested outside the interest and bond market. The investments are well diversified within each class of assets.

The Foundation manages its own capital. The investments are long-term and are followed up on a continuous basis. The Board of Directors receives monthly reports where the Foundation’s return is compared with the development in the market.

More information about 2019

As of 31 December 2019, the book value of the Foundation’s investments in shares and securities amounted to NOK 2,661 million. The fair value is assessed as being slightly higher at NOK 2,807 million, as the lower of acquisition cost and fair value is recorded in the accounts. In 2019, the Foundation recorded a return of NOK 260 million on its capital (based on market value), corresponding to 9,5%. The benchmark index indicated a return of 6.6%.