Europe’s biggest SWF makes fixed income loss

Norges Bank Investment Management has reported that the sovereign wealth fund it manages – Norway’s Government Pension Fund Global – made a loss of -1.4% from its fixed income investments in the second quarter of 2013 – although its overall return of 0.1% still earned it NOK17bn (€2.2bn).

Offsetting the losses in fixed income were slight gains from equity investments of 0.9%, and stronger returns from real estate of 3.9%. The fund has only been mandated to branch out into real estate in the past few years – it did not announce its first property acquisition until November 2010.

Yngve Slyngstad, CEO of NBIM, said that fixed income returns were hit by a rise in global yields. Equity returns from the US and Japan over the period were strong, but were weaker in emerging markets.

The fund, which was set up to invest fiscal revenues from Norway’s oil and gas industry, is viewed as Europe’s biggest equity investor, but has exposure to multiple regions and sectors. As such currency movements have an impact: over the second quarter the fund’s value gained some NOK139bn (€17.8bn) as a result of NOK weakening against key currencies. The government injected an additional NOK58bn (€7.4bn) in new funds.

The market value of the fund was NOK4.397trn (€562bn) as of 30 June, NBIM reported.


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