A positive return on our investments indicates that we are succeeding in creating profitable enterprises. Norfund has had a return of 11 per cent since its inception. The return in 2010 was ten per cent in investment currency, and all investment areas showed a positive return (see table below). In the present context, ’return’ means the internal rate of return on the cash flow to and from investments, including the assumed value of the investments at the end of the year. Norfund’s operating costs are not included in the calculations.
The return has varied considerably from year to year, and there are great variations within the investment portfolio. Given Norfund’s risk profile, the return will also fluctuate substantially in the future. It is therefore important to consider the return in a long-term perspective.
Investments in Financial Institutions and Renewable Energy have yielded the best return over time, particularly the investment in SN Power.
|
|
IRR in investment currency
|
Historically,“Other” geographical areas has had the highest return. This is due to SN Power having operations both in Asia and Latin America. Of the geographical areas in which we have invested, the best return over time has been in Africa, and in 2010 it was at the same level as the previous peak. The high return in Asia in 2010 is mainly due to the fact that we exited the Vietnam Equity Fund with an average annual IRR of 106 per cent. The negative return in Latin America is due to the write-down of individual funds, and political events in Honduras and El Salvador that weakened the markets in these countries. Equity investments have yielded the best return, both in 2010 and since inception, at 11 per cent and 12 per cent respectively. The reason for the lower return on investments in funds is partly due to the higher costs associated with this type of investment.
|
|
|
Return per instrument
|
Return per region
|
|
|
|
|
|
|
|
