Norway SWF makes 13.4% return in 2012

Norway’s Pension Fund Global, the sovereign wealth fund topped up by revenues from the country’s oil and gas industries, has reported its second best ever year, generating a return of 13.4%, or NOK447bn (€60.1bn) on behalf of its owner the Norwegian government.

Return on equity investments were 18.1% over the year, helped by appreciation in global stock markets especially through the second half of the year. The fund is Europe’s biggest equity investor, although the portfolio included shares, bonds and property registered in some 70 countries as of the end of 2012.

Fixed income investments returned 6.7%, and property made 5.8%.

The returns came as the fund made one of its most significant changes to strategy since it introduced a higher equity exposure limit of 60%. Geographical allocation of equity investments is now based on total market value. Investments in government bonds are allocated by country according to the size of its overall output. And nine emerging market currencies were approved for fixed income investments in 2012.

One illustration of the impact of the change in strategy is that while in 2011 the fund invested about NOK150bn in European equities, in 2012 it invested nearly the same amount in emerging bond markets.

The fund was valued at NOK3,816bn (€513.4bn) at the end of 2012, up from NOK3,312bn (€445.5bn) the previous year. The value would have been higher still but for the appreciation in NOK against other currencies through the year. Norges Bank Investment Management, the fund’s manager, estimated this knocked some NOK220bn (€29.6bn) off the value of the fund.


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