Big Investors Don't Know Where to Put Their Cash

Spiegel
June 5, 2012

As the debt crisis makes government and bank bonds look increasingly unattractive, institutional investors are finding themselves with plenty of cash but nowhere to put it. Pension funds and insurance companies are desperately looking for safe havens which promise even modest returns. But some argue that the crisis creates opportunities for those with an appetite for risk.

The man who controls more than €450 billion ($558 billion) is wearing purple, pink and red striped socks and a polka-dot tie, and his bald head looks as if it has been polished. In other ways, too, Yngve Slyngstad is a relaxed Norwegian type. He laughs a lot and has a tendency to inject nuggets of irony into his responses.

So what's it like to be one of the world's most powerful investors in 2012? "In the past, we searched for risk-free returns." He pauses for effect. "Today we know that what we mainly have are investments with return-free risk."

It's a common experience for the 49-year-old investor these days. His constant challenge is to find ways to invest a lot of new money and reinvest old money.

As head of the Norwegian sovereign-wealth fund, Slyngstad collects his country's oil revenues, which currently total more than €100 million -- per day. The fund is supposed to use these revenues to provide the country with prosperity for the long term. It's no easy task, because the government expects Slyngstad and his staff of more than 300 people to generate a 4 percent return on investment.

In the past, investment professionals would have dismissed this requirement as uninspiring. But times have changed. Between 1999 and 2007, the Norwegian sovereign-wealth fund achieved an average annual return of almost 6 percent, but during the last four years it has only been about 1 percent on average. "The situation in the financial markets has become extremely difficult," says Slyngstad. Interest rates are plunging worldwide, and Germany, more than any other country, is benefiting from the fear that the euro zone could break apart.

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