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The Fund adopts a Normay model. It means the investments are typically passively managed, and the tracking error should be minimized. The asset allocation is close to 60%/40% equity and fixed income split - the Fund's asset allocation is very close with a 55% equity, 40% in fixed income and 5% in alternative.
The advantages of Norway model are 1) easy to implement and does not require superior asset manager skills, 2) easy to communicate to the Board and IC, and transparent 3) low cost. The disadvantage is that there is no superior upside for investment return as it is passively managed and closely tracks a benchmark.