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
1,500 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 2000
Nobel Prize is SEK 9.0 million,
an increase of 13.9 per cent compared
to the 1999 Prizes.
The investment capital at market
value as per December 31, 1999,
amounted to SEK 3,938 million (approx.
USD 463 million). Foreign and Swedish
assets accounted for 50 per cent
each of the total portfolio.
