Financial Management

On November 27, 1895, a year before his death, Alfred Nobel signed the famous will which would implement some of the goals to which he had devoted so much of his life. Nobel stipulated in his will that most of his estate, more than SEK 31 million (today approximately SEK 1,600 million) should be converted into a fund and invested in "safe securities."

The income from the investments was to be "distributed annually in the form of prizes to those who during the preceding year have conferred the greatest benefit on mankind."

The Nobel Foundation is a private institution established in 1900 on the basis of the will. The investment policy of the Foundation is naturally of paramount importance to the preservation and, if possible the augmentation of the funds and, thus, of the prize amount. According to the original 1901 investment rules, the term "safe securities" was, in the spirit of that time, interpreted to mean gilt-edged bonds or loans backed by such securities or backed by mortgages on real estate. With the changes brought about by the two World Wars and their economic and financial aftermath, the term "safe securities" had to be reinterpreted in the light of prevailing economic conditions and tendencies. Thus, at the request of the Foundation's Board of Directors, in the early 1950s the Swedish Government sanctioned changes, whereby the Board for all practical purposes was given a free hand to invest not only in real estate, bonds and secured loans, but also in most types of stocks.

From 1901, when the first prizes (SEK 150,000 each) were awarded, the prize amounts declined steadily. But with this freedom to invest, along with the long-fought-for tax-exemption granted in 1946, it was possible to reverse this trend and, on average, even keep pace with increasing inflation. The real value of the prize amount in SEK terms was finally restored in 1991. The amount of the 2008 Nobel Prize is SEK 10.0 million.

The invested capital at market value as per December 31, 2007, amounted to SEK 3,628 million (approx. USD 560 million). Foreign and Swedish assets accounted for 67 and 33 percent, respectively.

The following table shows the market value of invested capital by type of assets (%):

  Dec. 31, 2007 Dec. 31, 2006
Shares    
Sweden 8 5
Europe excl. Sweden 22 20
USA 24 29
Japan 5 6
Other countries 5 4
  64 64
Interest-bearing Investments    
Sweden 20 23
Other countries 0 1
  20 24
Alternative Investments    
Property 6 3
Hedge funds and unlisted share funds 6 5
  12 8
     
Total Portfolio Capital 96 96
Administrative property holdings 4 4
Total Invested Capital 100 100

 

Table showing Prize Amounts »

Table of the Income Statement »

 

Copyright © The Nobel Foundation 2008