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00:00JONAH BERGMAN. HE IS ON THE PHONE. GOOD TO SEE YOU. HOW COULD THE GOVERNMENT WITHDRAW FROM THE NUMBER REGION'S SOVEREIGN WEALTH FUND? JONAH: WELL, IT IS INTERESTING THAT IT IS FINALLY ACKNOWLEDGING IT. IT HAS BEEN SAYING ALL YEAR THAT IT COULD HANDLE THE OUTPOST FIND THAT THE PROBLEM IS THAT IT IS TRYING TO BRANCH OUT INTO NEW ASSETS AND TAKE ON MORE RISK TO BOOST RETURNS. WHICH ARE BEING SEVERELY HAMPERED BY NEGATIVE RATES THAT ARE SPILLING INTO THE PORTFOLIO . WHAT IT HAS DONE IN THE PAST IS THAT IT HAS TAKEN INFLOWS FROM THE OIL INCOME THAT THE GOVERNMENT GETS AND USED THAT TO SHIFT STRATEGY. NOW, IT DOESN'T HAVE THAT ANYMORE. IT IS FORCED TO TAKE A CLOSER LOOK AT THE PORTFOLIO TO SEE WHERE IT CAN ADJUST AND WHERE IT CAN FIND NEW ASSETS TO MOVE INTO MORE SPACE AND INTO INFRASTRUCTURE. WHICH IT MIGHT DO NEXT YEAR AT SOME POINT. MARK: IS THE GOVERNMENT ABLE TO SHRUG OFF THE WITH -- SOVEREIGN WEALTH FUND, ARE THEY ABLE TO SHRUG OFF THE WITHDRAWAL FROM THE GOVERNMENT -- IT GETS ABOUT 200 BILLION DOLLARS IN INCOME PAYMENTS AND REAL ESTATE FUNDS. SO IT DOES HAVE CASH TO TAKE FROM. BUT THE ISSUE IS WHEN IT WANTS TO GO INTO NEW ASSETS. BUT WHEN IT NEEDS TO SHIFT ITS PORTFOLIO, IT WILL MOVE MORE INTO REAL ESTATE AND INTO INFRASTRUCTURE, AS I SAID. IT NEEDS TO FIND WAYS TO ADJUST ITS STRATEGY AS THOSE INFLOWS HAVE HALTED. VONNIE: AND ALSO PART OF THE PROBLEM IS THAT THE OLDER BONDS ARE MATURING AND IF THEY WILL BE REINVESTED, IT IS IN DEBT WITH NEGATIVE YIELDS, WHICH WOULD NOT HAVE BEEN THE CASE A FEW YEARS AGO. HOW MUCH CAN THE SOVEREIGN WEALTH FUND CHANGE ITS OWN RULES? CAN IS GOVERNMENT ITSELF? JONAH: WELL, THAT IS ONE OF THE MAIN STICKING POINTS. IT INVESTS BROADLY AND GLOBALLY. SO A LOT OF THE MATURING BONDS THAT ARE MATURING NOW WILL NEED TO BE REINVESTED INTO NEGATIVE YIELDS. IT IS HIT FROM BOTH SIDES. IT NEEDS TO KEEP UP WITH THE RETURN TARGET THAT THE GOVERNMENT HAS SET AT 4% WHILE AT THE SAME TIME THE GOVERNMENT IS TAKING OUT MONEY AND IT IS BEING FORCED TO REINVEST INTO BONDS THAT DON'T PAY. SO GOING THROUGH MAJOR REVIEWS NOW, AND WE WILL SEE THEM IN EARLY DECEMBER AND DECISIONS WILL BE TAKEN IN APRIL OF NEXT YEAR ON THE WAY FORWARD FOR THE FUND AND HOW IT WILL STRUCTURE ITS EQUITIES. VONNIE: INTERESTINGLY, IT IS TRYING TO TAKE DOWN THE SHARE. WHAT DOES THAT SAY ABOUT INFLATION IN SCANDINAVIA? JONAH: IT IS IN THE DEBATE RIGHT NOW OF HOW IT WANTS TO UP ITS STRUCTURE TO 70%. BUT AT THE SAME TIME, IT HAS BEEN TASKED TO UP THE REAL ESTATE PORTFOLIO. SO IT IS LOOKING AT THE CORRELATION BETWEEN BONDS AND STOCKS. AND NOW IT IS BASICALLY CORRELATED. SO IT IS A VASTLY DIFFERENT SCENARIO NOW TO IN 2007, WHEN THESE MEASUREMENTS OR THE INDEXES IT SET UP, IT IS A VASTLY DIFFERENT SCENARIO. WHEN THEY WERE SET UP. SO IT IS REALLY GOING TO GO

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Norway's Sovereign Wealth Fund Hampered by Outflows

Norway's government is withdrawing funds from the nation's $890 billion sovereign wealth fund as it faces lower prices on crude oil and low-to-negative interest rates. Bloomberg's Jonas Bergman examines how this may hamper the fund's ability to manage more risk. He speaks on "Bloomberg Markets. (Source: Bloomberg)

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