Norway oil fund reports 3Q gains of $29bn

Norway’s $660 billion sovereign wealth fund, the world’s largest stock investor, made $29bn last quarter, on the back of a global stock markets rally and reduced exposure to Eurozone government debt.

The Government Pension Fund Global, managed by Oslo-based Norges Bank Investment Management for the Finance Ministry (pictured), reported a return of 4.7%. That compares with a decline of 2.2% in the second quarter. Equity holdings returned 6.5% in the third quarter, while bonds gained 2.2%, and real estate returned 2.7%.

At the end of September, the fund held 60.3% of its assets in stocks, 39.4% in bonds and 0.3% in real estate. The fund’s mandate requires 60% in stocks, 35% in bonds and 5% in real estate.

Yngve Slyngstad, chief executive of NBIM, said: “The result was largely driven by a rally in global stock markets. Stocks gained the most in Europe, where the fund has about half of its shareholdings.” The MSCI Index rose 6% in Q3, while the Stoxx Europe 600 has risen 17% since June.

Stocks rose after ECB Governor Mario Draghi in July pledged to do “whatever it takes” to save the euro, including a bond buying programme to bring down interest rates. The US Federal Reserve announced a third round of quantitative easing to stimulate the world’s largest economy.

The fund’s largest stock holding at the end of the quarter was Nestlé, while its biggest bond holding was US Treasuries, followed by Japan and UK government debt.

Slyngstad told reporters that the fund is half-way through a process of asset reallocation.

The fund has been gradually reducing its exposure to European bonds: holdings of French government bonds were down 17% in the quarter, while US and Japanese government debt was up 9% and 10% respectively.

The fund has been increasing its exposure to risk, adding asset classes such as real estate and emerging markets in Asia and South America. 

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