Start ups are well aware of this, but our scale-ups, midcaps and SMEs also need greater access to equity leverage. In this field, our economy, like that of our neighbours in the euro area, is seriously lagging behind: in France, equity only accounted for 64% of GDP at end-2016, which is half as much as in the United States (128%). It is true that French and European savers are very attached to safe investments. The bulk (69%) of the EUR 4,765 billion in financial wealth held by French households is invested in interest rate products, compared to only 31% in equity products, i.e. invested in corporate capital in the form of listed or unlisted shares.1 However, it is important to distinguish, with respect to savers’ expectations concerning security, two components: they are attached to the protection of capital, even more so than to liquidity. With the increase in life expectancy, and with a greater need to prepare their retirement, savers are increasingly being steered towards long-term products; the liquidity component is becoming less decisive. Here, insurers have an essential role to play, by taking the lead on new forms of life insurance that aim for a three-fold compatibility: with low interest rates, our economy’s need for equity financing and the expectations of the French people. This requires new long-term savings products that are less liquid but feature a form of capital protection and offer over time the higher equity-type returns. Let me make myself absolutely clear: the development of unit-linked policies is not a sufficient response.
However, even though Norges Bank closely tracks the GPFG’s benchmark index, many big and small choices have to be made every day. The Executive Board is satisfied that the return over time has been higher than the return on the benchmark index against which the GPFG’s performance is measured. For 2021, the GPFG’s investments earned an overall return of 14.5 percent before management costs. The return was 0.74 percentage point higher than the return on the benchmark index defined by the Ministry of Finance. Since the turn of the year, the markets have been affected by Russia’s invasion of Ukraine and higher inflation in many countries. The GPFG’s equity and bond investments both fell in value in the first quarter of the year, and the overall return on investments was a negative 4.9 percent. Norges Bank’s investment management helped to dampen that fall somewhat. The return was 0.66 percentage point higher than the benchmark index for the quarter. The white paper The Government Pension Fund 2022 contains a broad review of the Bank’s active management of the GPFG. The Ministry proposes to maintain the size of the Bank’s permitted deviations from the benchmark index, measured as expected tracking error. This is consistent with Norges Bank’s assessment that the tracking error limit is adequate. On several occasions in 2021, the Executive Board provided the Ministry of Finance with advice and assessments regarding the GPFG’s approach to climate risk. This is also a key topic in this year’s white paper.