Alex Moss points me to a recent piece that reports on the decision by the Norwegian government pension fund to reject advice to begin to allocate funds to infrastructure – but instead to increase their allocation to unlisted real estate. The Norwegian Finance Minister is quoted as stating that
A number of important factors indicate that investments in unlisted infrastructure should not be permitted…Such investments are exposed to high regulatory or political risk. Conflicts with the authorities of other countries regarding the regulation of transport, energy supply and other important public goods will generally be difficult to handle and entail reputational risk for the fund…The government considers that a transparent, politically endorsed state fund like the GPFG is less suited to bear this type of risk than other investors. Following an overall assessment, the Ministry is not prepared to permit the GPFG to invest in unlisted infrastructure at this stage. It would be useful to gain more experience from unlisted real estate before any expansion to additional types of unlisted investment.
For anyone interested in the role of infrastructure and real estate in mixed asset portfolios, the advice to increase allocation to real estate and infrastructure is based on a very useful report by experts in the area.