Substantial market fluctuations and considerable uncertainty
“The third quarter of 2008 was an unusually demanding quarter for the management of the Government Pension Fund – Global. Uncertainty in financial markets increased dramatically, and this affected the return on the fund,” says Yngve Slyngstad, CEO of Norges Bank Investment Management (NBIM).
The market value of the Government Pension Fund – Global at the end of the third quarter was NOK 2 120 billion. Record-high transfers of NOK 128 billion were made to the fund during the quarter.
The return on the fund in the third quarter was -7.7 per cent in international currency. The return on the fund was 1.8 percentage points lower than that on the benchmark portfolio defined by the Ministry of Finance.
The Ministry of Finance has decided to increase the allocation to equities in the Government Pension Fund – Global from 40 to 60 per cent. At the end of the third quarter, the allocation to equities had risen to 53 per cent.
“NBIM is in a unique position in today’s market, and we are making record-high purchases in the equity market in 2008,” says Slyngstad. “It is possible for us to have a long time horizon for our investments.”
The quarterly report includes a special focus on the accumulation of the Government Pension Fund – Global as national saving in international financial markets funded by the sale of non-renewable natural resources. The relative value of oil and equities has become increasingly attractive for an oil producer in recent years.
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