Welcome to Morning Macro Weekend Edition on Saturday, 4 March 2017. Coming up, our full interview with Sony Kapoor, Managing Director of think tank Re-Define, advisor to central banks, international finance institutions, sovereign wealth funds – and a man who’s had a long-standing interest in the way the Norwegian sovereign wealth fund is run.
In our conversation, Sony explains how – given Norway’s own characteristics as a rich, old oil-dependent country – its sovereign wealth fund should take a deliberate strategy of investing in renewable energy and in emerging markets simply in order to hedge the country’s own future risks.
He points to other funds, including in Canada and even in the Gulf, who are showing Norway how it’s done, through – for instance – linking up with multilateral institutions to invest in emerging market infrastructure projects.
“If in fulfilling its core fiduciary duty to maximise returns while trying to minimise risk, the fund ends up doing good for the world, then of course you get to kill two birds with one stone,” he said – but the strategy he recommends would be “entirely self-interested trying to maximise return for minimum risk.”
“The fund’s current strategy tantamounts to locking in low return for high and rising risk – which is the exact opposite of what anyone in Finance 101 will tell you.”